Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Regional Consolidation, Good Or Bad?  
User currently offlineenilria From Canada, joined Feb 2008, 7111 posts, RR: 13
Posted (4 years 15 hours ago) and read 2133 times:

With Skywest buying everything in sight and Republic rumored to be doing the same, three marginal players in the RJ world remain after all these rumored deals take place: Mesa, Pinnacle, and Trans States. I can imagine each of those getting bought or simply shutting down.

Is this good or bad to have the regional world dwindle to two or three carriers? It'll probably drive cost plus rates up when coupled with the new 1,500 minimum pilot hours requirement.

12 replies: All unread, jump to last
 
User currently offlinedoug_Or From United States of America, joined Mar 2000, 3402 posts, RR: 3
Reply 1, posted (4 years 15 hours ago) and read 2111 times:

Pinnacle and Trans States are hardly marginal. Pinnacle now own Mesaba and Colgan while TSA own Compass and Go Jets. The remaining smaller jets operators (if Comair and Eagle get bought) would be Horizon, PSA, and Air Wisconsin. Horizon and PSA are currently wholly owned by their major partner.


When in doubt, one B pump off
User currently offlineDesertJets From United States of America, joined Feb 2000, 7773 posts, RR: 16
Reply 2, posted (4 years 15 hours ago) and read 2079 times:

I am not sure how it'll all flesh out, but one thing I would hope will happen is that the consolidation at the regional level will stop and hopefully reverse the race to the bottom that we've seen over the past decade. When there was somebody else with a few dozen 50 seaters available it was too easy for the majors to pick up somebody else for a few bucks less. That had the effect of pushing entry level wages down to unsustainable low levels and distorted the actual costs of 50 seat jet flying.


Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
User currently offlineJBo From Sweden, joined Jan 2005, 2317 posts, RR: 0
Reply 3, posted (4 years 15 hours ago) and read 2055 times:

Didn't we just have a discussion on this a couple weeks ago?

It's survival of the fittest ... companies like SkyWest and RAH have well-managed, high-standards companies and are therefore successful, while companies like Mesa who have scraped by for years cutting whatever corners they can get away with struggle and fall by the wayside.



I'd take the awe of understanding over the awe of ignorance any day.
User currently offlineenilria From Canada, joined Feb 2008, 7111 posts, RR: 13
Reply 4, posted (4 years 14 hours ago) and read 2020 times:

Quoting doug_Or (Reply 1):
Horizon, PSA, and Air Wisconsin.

Horizon is effectively for sale. The other two are small.

Quoting doug_Or (Reply 1):
Pinnacle now own Mesaba and Colgan while TSA

I know, but Skywest is MUCH bigger and Republic will be if they complete any of these deals.

Quoting DesertJets (Reply 2):
hopefully reverse the race to the bottom

Mesa Airlines (TM)

Quoting JBo (Reply 3):
Didn't we just have a discussion on this a couple weeks ago?

Not in its own thread, wasn't that about one of the transactions?

The key question: is this going to get CPA rates up? ...which is going to further shrink the industry (higher price always leads to less demand) ...or is it going to give the remaining guys more power to push the cost on to passengers and thus allow them to maybe grow...or at least not shrink.


User currently offlineThePinnacleKid From United States of America, joined Feb 2005, 725 posts, RR: 8
Reply 5, posted (4 years 14 hours ago) and read 2021 times:

US Regional landscape is becoming the following based out of current numbers on A.P.C.:

SkyWest, Inc - (7,123 total pilots, 703 total aircraft): **publicly said open to possible additional mergers/acquisitions**
SkyWest
Atlantic Southeast
ExpressJet **pending merger into ASA -or- ASA/XJT/SKW as 1 company**

Republic Holdings (2,777 total pilots, 265 total aircraft):
Republic
Shuttle America
Chautauqua
Midwest (phased out / name going to Frontier)
Frontier
-- Lynx (being phased out)

Trans States Holdings (1,073 total pilots, 90 total aircraft):
Trans States
GoJet
Compass

Pinnacle Holdings (2,865 total pilots, 277 total aircraft):
Pinnacle
Mesaba
Colgan (being phased into Mesaba)

Remaining individual carriers:
Air Wisconsin (650 pilots, 70 aircraft)
American Eagle (2,900 pilots, 274 aircraft) **IPO/Spinoff/Sell being discussed by AMR**
Comair (1,476 pilots, 120 aircraft) **Possible Merger/Consolidation talks**
Great Lakes (282 pilots, 40 aircraft)
Mesa (1,415 pilots, 92 aircraft - Shrinking RAPIDLY) **Possible Acquisition/Merger Talks**
Piedmont (477 pilots, 44 aircraft)
Horizon (721 pilots, 58 aircraft)
PSA (504 pilots, 49 aircraft)
CapeAir (188 pilots, 64 aircraft)
CommutAir (136 pilots, 16 aircraft)
Gulfstream Intl. (260 pilots, 21 aircraft)
Island Air (64 pilots, 6 aircraft)
PenAir (120 pilots, 26 aircraft)



"Sonny, did we land? or were we shot down?"
User currently offlineLAXintl From United States of America, joined May 2000, 25077 posts, RR: 46
Reply 6, posted (4 years 14 hours ago) and read 1988 times:

Quoting enilria (Reply 4):
The key question: is this going to get CPA rates up?

I don't believe so.
I believe rates will be as competitive as ever, as no one will want to loose a contract, while your competitor will work hard to bring the business into their camp.

What mergers could do is instead help improve margins internally, by allowing more efficiency at carrier at they can share ever more resources internally. (matter of fact I can see majors to use this as a reason for further pricing reductions!).



From the desert to the sea, to all of Southern California
User currently offlineenilria From Canada, joined Feb 2008, 7111 posts, RR: 13
Reply 7, posted (4 years 13 hours ago) and read 1919 times:

Quoting ThePinnacleKid (Reply 5):
Republic Holdings (2,777 total pilots, 265 total aircraft):

I think F9 has about 1,000 pilots, but Republic is still a strong second place among regionals.

Quoting LAXintl (Reply 6):
I don't believe so.
I believe rates will be as competitive as ever, as no one will want to loose a contract, while your competitor will work hard to bring the business into their camp.

I guess Airbus and Boeing are quite competitive, but I've gotta think few competitors will make it less competitive on pricing. It seems to say otherwise would be an oxymoron.


User currently offlineapodino From United States of America, joined Apr 2005, 4261 posts, RR: 6
Reply 8, posted (4 years 13 hours ago) and read 1906 times:

Quoting enilria (Thread starter):


Is this good or bad to have the regional world dwindle to two or three carriers? It'll probably drive cost plus rates up when coupled with the new 1,500 minimum pilot hours requirement.

I would not want to own stock in a regional carrier right now. The mainline carriers (especially UA and DL), have played their regionals against each other to drive down the costs. In some cases, UA even was willing to dump regional partners to cut costs (ACA and Air Wisconsin are great examples). Because many of these contracts were achieved by expanding fleets, the companies that were in a postion to grow were able to keep pilot costs down because they were able to hire the 500 hour guys off the street. What is happening now is that with all of this consolidation, there are fewer companies out there that have the resources to bid on new flying, assuming new flying becomes available at all. With fewer bidders, the major isn't going to be able to purchase capacity as cheaply as in the past. Additionally, because all regional pilots in the future will be required to hold an ATP at time of hire, the pool of qualified pilots is naturally going to be smaller. The regionals are not going to be in a position to lower hiring standards to attract new pilots (which is exactly how they have done it in the past, and look at Trans States for example as allowing a new hire to take his commercial checkride while on IOE with passengers on board), so the only way they can attract more pilots is to pay them more money. This also will be added costs that are passed along to the major partner.

In some cases, the regionals have grown so much. that they have surplus airplanes, and are even putting them into service at a loss because its less costly to them than to put the airplanes in the desert. United contracts with ExpressJet and ASA, as well as Skywest branded flying with FL out of MKE are examples of this.

The other wildcard in this situation is Mainline pilot contracts. US, UA, CO, and AA are all in negotiations. UA and CO have made it clear that protection of and expansion of scope is their key priority in contract negotiations, and will likely be a part of a merger agreement. AA pilots want to keep scope that they have, and I suspect that they may be willing to give wage concessions to get it (Wage concessions being what AA management has wanted). US still has to hammer out the whole East vs West thing, but assuming that they do, scope would be something I could see them wanting in a joint contract, especially after the Jets for Jobs went kaboom thanks to the bankruptcy.

Quoting ThePinnacleKid (Reply 5):
Air Wisconsin (650 pilots, 70 aircraft)

Slightly off topic, but this is a joke. Air Wisconsin management has consistently said that the reason they have been unable to grow is because their pilot contract is uncompetitive. ALPA of course disputes this, and they have the facts on their side to back this up. When pressed about this, the company tried hide behind mainline confidentiality agreements, even though Pilot contracts with other regional carriers are public knowledge. Additionally, the company is so short on pilots that all the reserve pilots are getting assigned trips early in the day, so they have no reserves available during the day to cover flying, plus flights are getting cancelled due to crew shortages. The pilots that are there are consistently flying 6 leg, 12 hour duty days (Assuming everything goes on time), and everyone is getting worn out. Plus couple into that the fact that the new hire classes are washing out at a very high rate, and they just can't get enough people in to cover all their flying. I hate to say it, but given all this, along with the merger mania, and it is looking more and more like ZW may be gone in 5 years when their US contract is up. Hopefully the new contracts next year (All of their major unions, which include Pilots, Dispatchers, Flight Attendants, and Mechanics have contracts that expire next year) will at least put them in a position to stay somewhat competitive. But as long as ownership is unwilling to take any risks at all, this doesn't look good at all for these guys.


User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 9, posted (4 years 13 hours ago) and read 1883 times:

Quoting ThePinnacleKid (Reply 5):
ExpressJet **pending merger into ASA -or- ASA/XJT/SKW as 1 company**



Are they reevaluating? I thought they announced it will be folded into EV? (cost savings, 2 GOs instead of three (OO, EV, XE) and other "synergies".

Quoting ThePinnacleKid (Reply 5):
Comair (1,476 pilots, 120 aircraft)



Wow. I had no idea they were down to only 120 a/c. I know a couple are out on temporary leases to another DCI carrier for lift but geez.



What gets measured gets done.
User currently offlineThePinnacleKid From United States of America, joined Feb 2005, 725 posts, RR: 8
Reply 10, posted (4 years 13 hours ago) and read 1839 times:

Quoting enilria (Reply 7):
I think F9 has about 1,000 pilots, but Republic is still a strong second place among regionals.

F9's group is included in the numbers I posted.... while separate pilot lists for almost all those consolidated companies.. I just grouped total aircraft and total pilots to show scope of the "holding" entities....

I didn't make up numbers out of my head.. I just went with the number provided off "Airline Pilot Central"... which are subject to being slightly off...

Quoting FlyASAGuy2005 (Reply 9):
Are they reevaluating? I thought they announced it will be folded into EV? (cost savings, 2 GOs instead of three (OO, EV, XE) and other "synergies".

The carriers may or may not be merged as 1 carrier when it's said and done... Just because things are announced publicly doesn't mean a hill of beans in the end. Just like Smisek had said no revision to the CO/UA new colors... and the next week the font changed. While SKW announced ASA had bought XJT and the two would be merged.. that is still not a done deal and not as clean as they would like it to appear. XJT pilot scope language was designed to ensure they could and would not be able to do this... the language here vs. intent is something that will more than likely go to court/arbitration.. the end result if upheld to XJT scope language REQUIRES all pilot lists under the "holding" company to be merged... in this case all 3 carriers would become 1 pilot list regardless of how the certificates may be operated... SKW is trying to make ASA look as though IT is the holding company and NOT SKW in an effort to merge only ASA and XJT... unfortunately for them, SKW is the one who lists both ASA and SKW on their financial statements, SKW is the one who funded the ASA purchase, and it was SKW that made the public announcement... hard to tell people that it wasn't really you when you're the one holding the purse strings. That's where the arbitration comes in.... because up until this purchase ASA and SKW were both the companies operating under SkyWest, Inc. (holding company)...

Either way, they may still end up operating both companies separate post merger ASA/XJT and SKW... but they may be staffed on the backside by 1 pilot list.... only time will tell.



"Sonny, did we land? or were we shot down?"
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 11, posted (4 years 12 hours ago) and read 1826 times:

Quoting ThePinnacleKid (Reply 10):

I think in the end, that's all they care about. Move from 3 GOs to 2 and OO remains non-union. Even if that means 3 subsidiaries under SkyWest Inc.



What gets measured gets done.
User currently offlineThePinnacleKid From United States of America, joined Feb 2005, 725 posts, RR: 8
Reply 12, posted (4 years 12 hours ago) and read 1808 times:

Quoting FlyASAGuy2005 (Reply 11):
OO remains non-union. Even if that means 3 subsidiaries under SkyWest Inc.

They won't have a choice.

The only way to ensure separate work groups (pilot side) is to not purchase XJT. It is the XJT scope language that will force ASA and SKW to both merge along with XJT as a pilot list. The intent of the language for the XJT Scope under their pilot's contract was to ensure that under no circumstances could the pilot group ever get into a situation where they could then be whipsawed against another pilot group under the same "holding" company... (It prevents what happened at Freedom vs. Mesa and also GoJet vs. Trans States)....

Once the merging of the lists is complete and the new pilot group is formed... of all 3 pilot groups.... then the "new" pilot group votes on representation or not... but with ASA being ALPA and XJT being ALPA.. and new unionization rules... you can bet.. the new pilot group will remain ALPA.. just with 7000+ pilots. In addition, one the re-ratification of representation takes place a new CBA must be negotiated with the "company"... so you can bet the best of all the different contracts will come through.. and IF the XJT scope language is once again placed into the new CBA (which you can almost bet on)... then it will further force SkyWest, Inc. to merge lists should they acquire additional airlines in the future... (Comair, Mesa, etc...)



"Sonny, did we land? or were we shot down?"
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
How Good Or Bad Is DL/ NW For KLM? posted Wed Feb 20 2008 07:37:38 by Paneuropean
Merger Mania Good Or Bad? posted Sat Jan 26 2008 10:13:13 by JRDC930
787 Dec 11th Update: Good Or Bad? posted Mon Dec 3 2007 16:08:31 by A380900
Pickering Airport... Good Or Bad? posted Fri Nov 2 2007 18:54:08 by AF340
AI To Join Star Alliance After Merger. Good Or Bad posted Thu Jun 7 2007 02:53:59 by Jlk
Oberstar: Good Or Bad For Aviation? posted Fri Dec 15 2006 09:19:11 by Scotron11
Booking Alitalia For Fall - Good Or Bad Idea? posted Tue Mar 14 2006 19:11:34 by Crazyro
Planes With Good Or Bad Residual Values posted Fri Jan 27 2006 20:06:14 by JAM747
Jet Blue, Good Or Bad For The Larger Carriers? posted Tue Jan 3 2006 19:21:11 by Worldliner
Good Or Bad Time For Airplane Manufacturers? posted Sat Nov 26 2005 01:38:44 by TheSonntag