Travel club members take wing: Ambassadair hoping to stop declining enrollment in wake of parent ATA's bankruptcy

August 29, 2005

Ambassadair Travel Club Inc. has lost about 20 percent of its members since parent ATA Holdings Corp. filed Chapter 11 bankruptcy last October, a trend its president hopes to reverse after ATA sells the long-profitable club as early as next month.

"After all the unfortunate attention surrounding ATA, we expected a modest decline in membership for a temporary time and look forward to obtaining new members once we make an a n n o u n c e m e n t next month," said Sally Brown, president of Indianapolis-based Ambassadair.

In March, the nation's largest private travel club said it was averaging 32,000 member households. In May, ATA and Ambassadair hired Washington, D.C.-based Adelphi Capital LLC to find a buyer for the travel club as ATA focused on restructuring its core business, ATA Airlines Inc.

The club founded in 1972 by Latvian native George Mikelsons-who for years piloted the club's first Boeing 720-also severed a key tie to ATA by hiring Atlanta-based TransMeridian Airlines to take over charter flying from ATA.

For some Ambassadair members, including those who fondly remember Mikelsons' gags such as greeting them in his pilot uniform while tapping a cane as if he were blind, the change was all too much.

Early this month, the club said its member base was down to 25,000-22 percent lower than the March figure.

"We've seen some attrition, obviously, [but] I expect that a good percentage of that will rebound," said Jeanne Scheets, Ambassadair's director of marketing and reservations.

"I imagine some people are just skittish. They hear things," Peter Jamison, travel consultant at Carmel-based Ross & Babcock Travel, said of the challenges facing Ambassadair.

Jamison noted that the club offers its members a 10-percent discount on ATA flights, a perk that ceases at the end of the year. The perk has already lost much of its luster now that ATA has shrunk to four from 40 daily flights at Indianapolis International Airport.

"That may have been a contributing factor to some of the lapsed memberships," Scheets said.

Ambassadair's loss apparently has been gain for some travel agencies, which say current or former club members are calling. "It would be totally anecdotal but, yes, we are seeing that. We are seeing a lot more inquiries," said Susie Hacker, co-owner of Greenwood/Milhon Travel & Cruise.

Hacker said travel agencies may pick up some business booking longer trips but probably not for short trips that Ambassadair has successfully packaged, particularly its chartered flights that leave earlier in the day than much of the scheduled service at the airport.

Ambassadair's convenient scheduling and direct flights to many destinations have helped retain members such as Frank M. Basile, who is senior vice president of property management at Indianapolis-based Gene B. Glick Co.

As gung-ho club member Basile sees it, any drop in membership is "a very temporary event."

Without Ambassadair's flights to obscure destinations such as Glacier Park International Airport in Kalispell, Montana, "I would have never gone to Glacier National Park," Basile said.

The same goes for Ambassadair flights to Paris.

"I love getting their catalog. It's like being a kid in a candy store," he said.

Ambassadair executives hope that catalog will be much thicker when a buyer is found, one that is willing to inject more capital into the club than struggling ATA could.

Ambassadair had operating revenue of $23.5 million in 2003 and $24.9 million in 2002, according to records filed in ATA's bankruptcy. The most recent revenue figures available for 2004 were $21.6 million for the first 10 months of the year.

The club touts that it has been profitable in each of its 32 years.

Scheets said Ambassadair officials have had meetings with potential buyers in the last several weeks. She declined to name or describe the firms.

"We're waiting for that first bid" within two weeks, she said.

U.S. District Bankruptcy Court in Indianapolis, where ATA filed Chapter 11 reorganization on Oct. 26, must approve the sale of Ambassadair.

"All the potential buyers would inject more capital into Ambassadair and would focus on taking it to a higher level, with more member benefits and customer service," Brown said.

Scheets cites improvements already brought by recent changes, including the introduction of hot meals by TransMeridian. The Atlanta-based carrier flies MD-83 jets to some of Ambassadair's popular destinations such as Cancun and Las Vegas. Ambassadair executives are looking at extending the TransMeridian contract, which expires at year end.

Scheduled carriers on which Ambassadair buys blocks of group tickets fly the club's longer trips, such as to Asian and European destinations. Scheets said the club probably would maintain some business relationship with ATA, which in the past has used its Lockheed L-1011 jumbo jets to ferry Ambassadair members across oceans.

Most of Ambassadair's members live in Indiana, though it has members in about 45 states and Canada. Brown said the club plans more than 640 trips worldwide in 2006.

"We are more than ready for the next phase in Ambassadair's history," she said.

In one last and mostly symbolic severing of ties to ATA, Ambassadair plans soon to move out of ATA's corporate offices, to another location in the airport vicinity.
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