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The Relationship Between Mainline/Regionals?  
User currently offlineFlybyguy From United States of America, joined Jun 2004, 1801 posts, RR: 1
Posted (6 years 4 months 4 days 8 hours ago) and read 1424 times:

If I understand correctly wholly owned subsidiaries can help or hurt the bottom lines of their parent airlines as the following article shows:

http://www.detnews.com/apps/pbcs.dll...D=/20080818/BIZ/808180324/1001/BIZ

However, for majors that arrange contract flying through regionals, how are regional prices developed and controlled? Do the regionals control the prices on the routes they fly or the parent carrier?

Additionally during any contract period with a regional partner, could the legacy carrier order their regional partner to do flying that is blatantly unprofitable in order to shift failing routes from themselves to their partners in order to maintain slots and market share?


"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
3 replies: All unread, jump to last
 
User currently offlineSafetyDemo From United States of America, joined Sep 2007, 310 posts, RR: 0
Reply 1, posted (6 years 4 months 4 days 6 hours ago) and read 1352 times:

Most regional airlines that are not wholly-owned operate under a "Fee-for-departure" arrangement. The mainline partner pays the regional airline a certain fee for operating each flight. On these routes/flights, the mainline partner controls the pricing and pays for everything (generally) except the airplane and the crew (the regional carrier provides both of those).

Some agreements are "At-Risk". In that type of arrangement, the regional airline pays the mainline carrier a licensing fee for using the mainline carriers name and logo. The mainline carrier markets the flights, but the regional airline sets the pricing. In these instances, I think the regional carrier pays for fuel but I could be wrong on that. An example of this is the TranStates ERJ-145 operation for USAirways in PIT. That flying is at-risk.

So, unless the agreement was an at-risk agreement, shifting the flying from a loss-making mainline flight to a loss-making regional flight would not eliminate the loss from the mainline partner.

-safetyDemo



Please direct your attention to the flight attendants in the cabin...
User currently offlineKcrwFlyer From United States of America, joined May 2004, 3847 posts, RR: 7
Reply 2, posted (6 years 4 months 4 days 6 hours ago) and read 1343 times:



Quoting SafetyDemo (Reply 1):
Some agreements are "At-Risk". In that type of arrangement, the regional airline pays the mainline carrier a licensing fee for using the mainline carriers name and logo. The mainline carrier markets the flights, but the regional airline sets the pricing. In these instances, I think the regional carrier pays for fuel but I could be wrong on that. An example of this is the TranStates ERJ-145 operation for USAirways in PIT. That flying is at-risk.

Isnt most of Colgans flying for US and UA at-risk as well?


User currently offlineDurangoMac From United States of America, joined Dec 2006, 743 posts, RR: 0
Reply 3, posted (6 years 4 months 4 days 6 hours ago) and read 1326 times:



Quoting Flybyguy (Thread starter):
However, for majors that arrange contract flying through regionals, how are regional prices developed and controlled?

The thing I think that some don't realize is that regionals pass on the cost of doing business (Soda, peanuts, fuel, etc) from the flights and if the regional ground handles a station they also pass alot of those costs on (leases for space, payroll, etc). The key to making the partner like what the regional/contract company is doing is something that OO take very serious, keeping the cost down. OO is by no means the cheapest one out there but they work directly with UA, DL, YX to minimize the cost for every aspect of the operation.

Something I'm curious to know is how those stations UA decided to take away from OO to give to OH, DGS and others are doing on their cost considering they way under bid OO apparently. Are they even keeping up with bids they gave UA?


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