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The State Of The Regional Airline Industry  
User currently offlineflyboy80 From United States of America, joined Jul 2001, 1876 posts, RR: 3
Posted (4 years 1 month 2 weeks 4 days 22 hours ago) and read 3715 times:

It's been interesting to look at the past 15 years in North American commercial aviation and see the position that regional airlines have played, especially since the regional jets have come on scene.

There's certainly been an abundance of changes to how airline's networks operated. Everything from three hour flights on 50 seat aircraft, to having first class service to airports which were formerly flown by prop aircraft.

I'm curious as to the future of regional airlines, and more importantly their "independent" industry as a whole? Some companies seem to be taking delivery of aircraft, others (most) seem to be making reductions in their overall capacity. Is it possible the United States will see an increase in mainline operations? Are regional airlines no longer an efficient alternative?

What factors contributed to rapid regional airline growth and expansion, which is absent or partially absent in today's market? I remember after 9/11 there was an large increase, almost a surge it would seem, in regional airline capacity, and many of the larger airlines were removing themselves from traditionally mainline stations and "in came the RJs." Did fuel prices play an important role, and are they to a point today where flying 50 and 70 seat jet aircraft (whats on the market) is not cost efficient?

10 replies: All unread, jump to last
 
User currently offlineCrosscheck007 From Poland, joined Jan 2010, 278 posts, RR: 2
Reply 1, posted (4 years 1 month 2 weeks 4 days 20 hours ago) and read 3639 times:

I think the industry should make up its mind, either go to wholly owned divisions (American Airlines = American Eagle) or just code-share/interline with independently run airlines which are allowed to operate under their own brand (as United did with Air Wisconsin waaay back before there was a United Express).

Cheers,

007



Je l'attends pas un homme. J'apporte le parti, j'apporte le feu d'artifice.
User currently offlineJBo From Sweden, joined Jan 2005, 2313 posts, RR: 0
Reply 2, posted (4 years 1 month 2 weeks 4 days 19 hours ago) and read 3541 times:

There are advantages to having a wholly owned subsidiary doing your regional flying (greater control, etc.) and there are advantages to having the business contracted out to independent companies (less overhead costs from not having a subsidiary).

What's interesting is that the regional airline industry has gone from a number of smaller companies, all of whom typically flew for only one, maybe two major carriers, to fewer, larger airlines with multiple contracts.



I'd take the awe of understanding over the awe of ignorance any day.
User currently offlineCrosscheck007 From Poland, joined Jan 2010, 278 posts, RR: 2
Reply 3, posted (4 years 1 month 2 weeks 4 days 16 hours ago) and read 3442 times:

Quoting JBo (Reply 2):
What's interesting is that the regional airline industry has gone from a number of smaller companies, all of whom typically flew for only one, maybe two major carriers, to fewer, larger airlines with multiple contracts.

This I think is really bringing down quality of service. It is pathetic when the flight attendants are making announcements for a Delta Connection flight on an American Connection flight. I think airlines should find what they do best and stick to it, not try and be everything to everyone. Then again, I think I could be considered an "Airline Puritan", LMAO!  

Cheers,

007



Je l'attends pas un homme. J'apporte le parti, j'apporte le feu d'artifice.
User currently onlinelightsaber From United States of America, joined Jan 2005, 12885 posts, RR: 100
Reply 4, posted (4 years 1 month 2 weeks 4 days 15 hours ago) and read 3373 times:
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With consolodation (UA/CO, DL/NW), we are seeing a consolidation of hubs as well as the regional service that feeds those hubs. Some routes, once consolidated, could go mainline.

We also have the ability to drive much further than 50 years ago. With the delays in checking into major airports, some routes that used to be easy flights... are now drives in about the same time.

I think too much of the post 9/11 RJ expansion was to hold onto markets that are no longer viable with any size aircraft. In part, this is due to very high oil prices that are unlikely to ever see sub-$35/bbl again.   The RJ was built for that environment and not todays $70/bbl environment. Rail in Europe lessens the demand for RJ service... so there is a global surplus of RJ's.

Between now and 2015, I've read studies predicting 40% of the 50-seat RJ fleet will be parked. Starting soon (as in 2 or 3 years), the contracts that were signed in 2001/2002 come up for re-negotiation. I expect many to be down-sized.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineNASBWI From Bahamas, joined Feb 2005, 1304 posts, RR: 0
Reply 5, posted (4 years 1 month 2 weeks 4 days 12 hours ago) and read 3145 times:

There was an interesting program on TV not too long ago (I believe on PBS) regarding the regional airline industry, and it shed some light on some of the very questions posed by the OP.

Quoting flyboy80 (Thread starter):
What factors contributed to rapid regional airline growth and expansion, which is absent or partially absent in today's market? I remember after 9/11 there was an large increase, almost a surge it would seem, in regional airline capacity, and many of the larger airlines were removing themselves from traditionally mainline stations and "in came the RJs." Did fuel prices play an important role, and are they to a point today where flying 50 and 70 seat jet aircraft (whats on the market) is not cost efficient?

In a word, cost. Before the oil crisis (and post-9/11), many airlines found that it was actually less expensive to contract a smaller carrier to carry out its missions to smaller markets, thereby feeding the mainline (and bottom line).

Pre-9/11, fuel costs were not a big issue, and the airlines wanted to respond to what the public wanted. Frequency, efficiency, comfort, etc. In the '90s, regional jets were making their grand entrance. With the introduction of the CRJ, followed by the ERJ, all of these requisites were able to be met. Turboprops took a back seat, and customers were generally happy. After all, low as those windows are, the average pax (at least in the US) would take a CRJ over a Brasilia any day. There was a sense of 'streamlining' the operation, as far as customer expectations were concerned.

During and after the fuel crisis, the mainline carriers realized that the costs of operating these small jets were too much to handle for the missions they were operating. Maybe it was a kneejerk reaction; maybe it was careful planning. But the mainline carriers managed to re-deploy these aircraft on longer, thinner routes that could possibly generate profits. Even so, wholly owning a company with such high costs can be detrimental to the bottom line of said mainline carrier. And in come the contacts   .

The idea of -50 seat and higher capacity aircraft was a great idea when fuel costs weren't so high. If you look back in time (not too far; perhaps the '90s/late '80s), there was a huge gap in capacity among regional carriers. There were the -19 seaters, the -30 seaters, and the -50 seaters....followed by (rarely) the -85 seaters (mostly operated by Air Wisconsin and Mesaba). They were the 'feeders', and the capacity was just right for that purpose. These days, it's all about CASM, and CASM can be affected by capacity as well as efficiency of the aircraft. If a CR2 and CR9 have the same fuel efficiency, for example, the which one should the airline operate? The CR9 can fit up to 40 more people, which translates to 40 more opportunities to make a profit - or at least break even.

With the introduction of ever-more-efficient aircraft, CASM can be reduced, but now the airline is faced with this problem: we've been making money by operating larger aircraft with lower costs; why should we get a smaller one when we can half-fill the larger one for the same price? It's pretty much the reason that Bombardier stopped getting orders for the Dash 8-300 once the -400 proved itself.

My apologies for making this so long-winded lol. And I'm sure I've left a lot out. Feel free to continue... this is just my $5.   



Fierce, Fabulous, and Flawless ;)
User currently onlinejfklganyc From United States of America, joined Jan 2004, 3379 posts, RR: 5
Reply 6, posted (4 years 1 month 2 weeks 4 days 11 hours ago) and read 3090 times:

I think we are going to look back at regional airlines 20 years from now and say that they peaked with the rest of the industry in the late 90s.

Going forward, I expect we will continue to see consolidation with brands disappearing on the legacy level AND I expect we will see steady growth on the LCC level.

As the legacies consolidate and hubs are shrunk or eliminated, RJs disappear. As LCCs grow, mainline aircraft reappear.

The 50 seat RJ did many things for the industry, but I think its going the way of the dodo


User currently offlineCrosscheck007 From Poland, joined Jan 2010, 278 posts, RR: 2
Reply 7, posted (4 years 1 month 2 weeks 4 days 10 hours ago) and read 3050 times:

Quoting jfklganyc (Reply 6):
AND I expect we will see steady growth on the LCC level.

God I hope there is a shift away from the WN and NK models (where flying is like riding the bus), and more like FL and B6 where there is a touch of class!

Cheers,

007



Je l'attends pas un homme. J'apporte le parti, j'apporte le feu d'artifice.
User currently offlinecslusarc From Canada, joined May 2005, 838 posts, RR: 0
Reply 8, posted (4 years 1 month 2 weeks 3 days 19 hours ago) and read 2860 times:

The fate of the 50 (or less) seater was sealed September 14, 2005 when both NW and DL filed for Chapter 11 bankruptcy protection. In the year-or-so period prior to the Chapter 11 filings the major airlines were beginning to report were weakening of their regional capacity purchase programs, but failed to take aggressive measures to halt deliveries of this class of aircraft. If they had acted sooner, we might be in a better position today.


--cslusarc from YWG
User currently offlineplanemaker From Tuvalu, joined Aug 2003, 6120 posts, RR: 34
Reply 9, posted (4 years 1 month 2 weeks 2 days 23 hours ago) and read 2638 times:

Quoting jfklganyc (Reply 6):
Going forward, I expect we will continue to see consolidation with brands disappearing on the legacy level AND I expect we will see steady growth on the LCC level.

There will be consolidation with LCCs as well. And at some point there will be international consolidation among legacies.

Quoting jfklganyc (Reply 6):
The 50 seat RJ did many things for the industry, but I think its going the way of the dodo

Considering that the total RJ market was originally expected to only reach 400 units, and it has reached 5 times that, RJs have had a great run thanks to Scope and the rise of LCCs.



Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 10, posted (4 years 1 month 2 weeks 2 days 16 hours ago) and read 2487 times:

Quoting lightsaber (Reply 4):
Between now and 2015, I've read studies predicting 40% of the 50-seat RJ fleet will be parked. Starting soon (as in 2 or 3 years), the contracts that were signed in 2001/2002 come up for re-negotiation. I expect many to be down-sized.

And DL has already started. They had a plan out that was to return a sizable portion of their leased CRJs between I believe this year or late last year and 2012. Many are going and the CR9 and 175 seems to be king right now. Even DL has started putting F seats in ASA's 700s.

Quoting NASBWI (Reply 5):
After all, low as those windows are, the average pax (at least in the US) would take a CRJ over a Brasilia any day.

Exactly, and people today seem to forget that many, many markets that started to see the CRJ saw these little turbo-props for rolling years and welcomed the "cool, fast jets" with open arms. I was a change that they liked and responded to and the airlines responded as well with more and more orders.



What gets measured gets done.
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