I stumbled across the following ATW article from a couple of months ago.

http://atwonline.com/aeropolitics-re...cle/has-regional-bubble-burst-0511

This article made me think about a few things that would lead me to get out of owning stock in regional airlines.

1. Aside from Delta, every carrier that is flying that uses regional partners (save maybe AS), is currently in negotiations with pilot unions over new contracts. The number one priority for most of the pilot unions is protection of scope, or tougher scope. And CO and UA are about to merge, and you know that the Unions will want the CO scope protected.

2. The economics of 50 seat RJ's still don't make a lot of sense, and there are still too many of them flying.

3. Regional outsourcing is becoming less economical to the operating carrier. As this article states, only UA and AS make money off of their express flying. And someone pointed out that although they keep saying the shift to regional flying was because of lower costs. In reality, mainline CASM are less than what they pay the express. At UAL, the express operation very rarely is cash flow positve. It's about "frequency" and outsourcing.

4. As contracts become amendable, it becomes harder and harder for established regionals to keep costs down. This is what propelled RAH into the powerhouse it is, and also part of what drove MAG into chapter 11, but it has prevented companies like Air Wisconsin from gaining additional flying, and it has also put other regionals such as Business Express and Atlantic Coast out of business, and that was before the RJ boom.

5. With a democratic congress there will be increased scrutiny, as well as possible legislation geared toward the way regionals are operated. Congress this week passed a law requiring even F/O's to hold an ATP certificate. Good bye 500 hour wonderkid.