Thousands of travelers were stranded, many at the ticket counters, when ATA Airlines shut down operations and declared Chapter 11 bankruptcy.

This is the second time ATA entered bankruptcy in less than four years; it declared Chapter 11 in October 2004 and emerged from it in February 2006, after firing workers, cutting flights and ending aircraft leases.

ATA’s announcement comes just days after Aloha Airlines filed for bankruptcy and shut its doors.

The Indianapolis-based ATA had already cut flights to Cancun and Guadalajara, Mexico, to try to keep afloat, and had announced that it planned to quit operating from its hub at Midway Airport in Chicago. The airline had also announced on March 6 that it would focus on its charter business serving the military, and now blames the loss of that contract to its demise.

According to Bloomberg News, ATA listed debts of $100 million to $500 million and assets of $100 million to $500 million in court papers. ATA employed more than 2,200 people, most of whom were laid off.

ATA’s bankruptcy will also affect Southwest Airlines customers who are headed to Hawaii, as the airlines have a code-share agreement. According to ATA’s Web site, Southwest “will take care of all customers who purchased a ticket on Southwest and are scheduled to travel on ATA service by rebooking them on a new itinerary, or offering a full refund for any unused portion of a ticket.”

Between Aloha, whose main hub was Honolulu International, and ATA, which offered dozens of flights a day between Honolulu and cities in the mainland US, the number of flights to Hawaii is likely to drop sharply. Inter-island flights will likely plunge, since Aloha controlled between 30-60 percent of this market, depending on the airport.

According to John Rauser, a “Fareologist” at Farecast.com, ATA was strongest out of Oakland, particularly to airports other than Honolulu (though they still held 61 percent of this market).

For example, they controlled half of the seats between Oakland and Maui (OGG), and a whopping 92 percent between Oakland and the Big Island’s Hilo airport. These airports are also going to be among those most affected by Aloha’s closure.

Elsewhere, ATA played a pivotal role in providing competition, such as between Dallas-Fort Worth (DFW) and Chicago’s Midway (MDW), where they were projected to carry 72 percent of passengers in April, according to Farecast.

With reduced competition on these routes, and especially at Chicago’s main alternate airport, Midway, it’s natural to assume prices will rise. Find out what America’s best alternate airports are, and why you should know them.

Bottom Line: Flights to Hawaii are about to get more expensive.

Meanwhile, according to the Honolulu Advertiser, the Governor of the Aloha state, Linda Lingle, and CEO of Aloha Airlines, David Banmiller, are locked in an increasingly sharp war of words over the government’s role in keeping airline afloat.

Gov. Lingle had led a failed last-ditch effort to keep the airline going, and expressed dismay at the closure and concern for the “employees [who] have made tremendous sacrifices including a lot of financial concessions through the years.”

Banmiller responded that he’d been warning Lingle of the carrier’s precarious financial position for two years and added: “If the governor or the administration has a plan, I hope it includes money, not rhetoric.”

Airlines are struggling with skyrocketing fuel prices, a slowing economy, internal labor issues, and increased competition, but analysts generally don’t think that the larger carriers are in any immediate danger of service-ending bankruptcy.

ATA stated that it will not honor any tickets or reservations and called upon other carriers to help stranded passengers. We spoke with Brian Greehan, a spokesperson for MasterCard, who said that if you purchased your ticket with a credit or debit card from a travel agency, contact the agency to claim a refund. If you purchased it directly from the airline, contact the card’s bank issuer.

Related links: Indianapolis Star, Bloomberg, WTHR, Honolulu Advertiser

Want to connect with the spirit of aloha? Check out the Off-the-Brochure Travel Guide to Honolulu, Hawaii.

Looking for even more in-depth news coverage of the week’s top stories? Visit our Travel News Analysis Category.

By Matt Calcara and Sarika Chawla for PeterGreenberg.com.