Champion Air to close, Aloha Air ceases flights

NEW YORK, March 31 (Reuters) - Champion Air, a charter airline that has flown tourists, sports teams and U.S. Department of Defense personnel, said on Monday it will shut down on May 31 after 11 years in business.

The closely-held, Bloomington, Minnesota-based company blamed rising fuel prices, the slowing economy and the ability to attract new capital for the closing. About 550 employees will be affected, Champion said.

Separately, Aloha Airgroup Inc, the parent of Aloha Airlines, ceased passenger operations on Monday, less than two weeks after filing for bankruptcy protection for a second time. This shutdown will affect about 1,900 workers and ends 61 years of service.

Aloha blamed its closure in part on competition from Mesa Air Group Inc's (MESA.O) low-cost go! airline. In a statement late Sunday, Aloha Chief Executive David Banmiller said his company "simply ran out of time" to find a buyer or obtain new financing.

Mesa was not immediately available for comment.

Champion began flying as MGM Grand Air in 1987. It said it operates 16 Boeing 727 aircraft, which are older and less efficient than many jets now used by major carriers.

"Unfortunately, our business model is no longer viable in a world of $110 (a gallon) oil, a struggling economy and rapidly changing demand for our services," Chief Executive Lee Steele said in a statement. "The best course of action is to cease flying and to wind up our operations in a responsible, deliberate manner."

Champion said it will fulfill its current commitments and has adequate funds to keep operating and settle outstanding financial operations. (Reporting by Jonathan Stempel; Editing by Andre Grenon)