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Why Don't Airlines Operate Their Own Regional Ops?  
User currently offlinekaitak744 From United States of America, joined Jul 2005, 2373 posts, RR: 3
Posted (2 years 2 months 3 weeks 3 days 20 hours ago) and read 9135 times:

Why don't airlines operate their own regional flights?

For example, Delta has Comair, and Delta Connection which is operated by several other airlines.
United has United Express which is operated by Skywest, etc.

Why don't airlines just do everything in house? What is the business case for splitting operations, and even outsourcing them?

Also, it seems only airlines in the U.S. do this, or am I wrong?

33 replies: All unread, showing first 25:
 
User currently offlineB738FlyUIA From Kazakhstan, joined Dec 2009, 557 posts, RR: 0
Reply 1, posted (2 years 2 months 3 weeks 3 days 20 hours ago) and read 9114 times:
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Quoting kaitak744 (Thread starter):
Also, it seems only airlines in the U.S. do this, or am I wrong?

In Europe AF has CityJet and LX uses Helvetic.


User currently offlinekaitak744 From United States of America, joined Jul 2005, 2373 posts, RR: 3
Reply 2, posted (2 years 2 months 3 weeks 3 days 20 hours ago) and read 9101 times:

Ok. I don't understand why those flights cannot be done by the airline it self under its own name.

User currently offline817Dreamliiner From Montserrat, joined Jul 2008, 2331 posts, RR: 1
Reply 3, posted (2 years 2 months 3 weeks 3 days 20 hours ago) and read 9098 times:

I believe its cheaper to outsource regional operations than to operate with the airlines own metal but operate the flight under their brand eg Delta connection but comair operating the flight.

Quoting kaitak744 (Thread starter):
Also, it seems only airlines in the U.S. do this, or am I wrong?

I know ANA does this as well with Air Nippon and ANA wings and I believe LH does as well with contact air and various others. Other examples can include DHL and fedex who has other airlines flying under their brand. For instance Air St kitts and nevis for DHL and Mountain air and air contractors for Fedex.

[Edited 2012-06-07 02:11:16]


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User currently offlineusflyer msp From United States of America, joined May 2000, 2124 posts, RR: 0
Reply 4, posted (2 years 2 months 3 weeks 3 days 20 hours ago) and read 9085 times:

HP tried operating everything from DH8's to 757's as mainline in the 1980's/early 1990's and it did not work. Mainline costs are generally too high to support the operation, especially when you have competitors using lower cost regional carriers.

User currently offlineB738FlyUIA From Kazakhstan, joined Dec 2009, 557 posts, RR: 0
Reply 5, posted (2 years 2 months 3 weeks 3 days 20 hours ago) and read 9074 times:
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Quoting 817Dreamliiner (Reply 3):
..and I believe LH does as well with contact air and various others.

Correct! and..

AirDolomiti, Augsburg Airways, CityLine & Eurowings

LH - Partner Airlines


User currently offlinePelle From Denmark, joined Apr 2012, 63 posts, RR: 0
Reply 6, posted (2 years 2 months 3 weeks 3 days 19 hours ago) and read 8870 times:

I already asked sort of the same question a month ago:

Regional Airlines Vs Mega-airlines (by Pelle May 1 2012 in Civil Aviation)



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User currently offlineBrouAviation From Netherlands, joined Jun 2009, 985 posts, RR: 1
Reply 7, posted (2 years 2 months 3 weeks 3 days 18 hours ago) and read 8826 times:

Quoting B738FlyUIA (Reply 1):

In Europe AF has CityJet and LX uses Helvetic.


And I believe the RJ's under the Swiss brand are operated by SWISS EUROPEAN, as shown on the ticket, i.s.o SWISS which is shown when flying A32S or bigger.

KLM has Cityhopper, BA has Cityflyer, TAP uses Portugalia. Iberia had Air Nostrum and Denim Air flying for them, is this still going on?



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User currently offlineAesma From France, joined Nov 2009, 6616 posts, RR: 9
Reply 8, posted (2 years 2 months 3 weeks 3 days 18 hours ago) and read 8738 times:

CityJet, Régional and Brit Air are operated somewhat independently from AF but are wholly owned by AF so you can indeed say that AF operates its own regional ops.


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User currently offlinepanamair From United States of America, joined Oct 2001, 4898 posts, RR: 25
Reply 9, posted (2 years 2 months 3 weeks 3 days 18 hours ago) and read 8689 times:
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Quoting BrouAviation (Reply 7):
And I believe the RJ's under the Swiss brand are operated by SWISS EUROPEAN, as shown on the ticket, i.s.o SWISS which is shown when flying A32S or bigger.

I believe Swiss European is slightly different than the others like AF's Cityjet or Regional, because it really is a blend, i.e., only the pilots are under a separate contract (only allowed to fly the ARJs) whereas the flight attendants are actually "Mainline" SWISS FAs who move interchangeably between the ARJs and the A32X/333/343s..... All the others like Cityjet or Regional or Brit or CityLine or Eurowings, are actually separate companies with their own pilots and cabin crew...


User currently offlinejfk777 From United States of America, joined Aug 2006, 8341 posts, RR: 7
Reply 10, posted (2 years 2 months 3 weeks 3 days 17 hours ago) and read 8567 times:
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AA owns American Eagle, Delta used to own ASA. In some cases airlines do own regionals. Regional airlines often are not owned by "big" airlines because they need a lower cost structure to make money, "big" airline costs would make them loose money. Unions in the same airline want the pay to be the same for say AA mainline and Eagle, that just doesn't work. One reason AA is in chapter 11 is the limitations of Eagle with larger regional jets. AA would love to have 100 E170 or E-190.

User currently offlineLOWS From Austria, joined Oct 2011, 1141 posts, RR: 1
Reply 11, posted (2 years 2 months 3 weeks 3 days 17 hours ago) and read 8525 times:

Quoting B738FlyUIA (Reply 5):

Quoting 817Dreamliiner (Reply 3):
..and I believe LH does as well with contact air and various others.

Correct! and..

AirDolomiti, Augsburg Airways, CityLine & Eurowings

And to a certain degree, VO. Eg. FRA-SZG is now operated under an LH flight number with an OS codeshare.


User currently offlineBMI727 From United States of America, joined Feb 2009, 15735 posts, RR: 27
Reply 12, posted (2 years 2 months 3 weeks 3 days 17 hours ago) and read 8442 times:

Quoting kaitak744 (Thread starter):
Why don't airlines operate their own regional flights?

Many used to, and it just isn't worth it. Bethune is on record saying that there is no reason to own the regionals. Letting the contractors stay independent allows for more flexibility and less cost, not least because an in-house carrier will use the mainline payscales as leverage. Plus regionals don't have all their eggs in one basket necessarily.

Quoting kaitak744 (Reply 2):
Ok. I don't understand why those flights cannot be done by the airline it self under its own name.

Small planes are uneconomical enough without paying mainline crews to fly them.

Quoting jfk777 (Reply 10):
AA owns American Eagle,

...which was itself pieced together from a bunch of regionals AA bought and is now going to be sold.

Quoting jfk777 (Reply 10):
One reason AA is in chapter 11 is the limitations of Eagle with larger regional jets. AA would love to have 100 E170 or E-190.

Yes, but that's because of a deal American made with their employees and has nothing to do with the ownership of Eagle or anyone else. Chautauqua and Trans States were bound by the same restrictions as AA Connection.



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User currently offlinedrgmobile From Canada, joined Aug 2006, 637 posts, RR: 0
Reply 13, posted (2 years 2 months 3 weeks 3 days 11 hours ago) and read 7893 times:

Wow. I can't believe this question hasn't been answered yet. It's all about labour costs. Period. End of discussion. There is an element of core business versus non core business, but in developed markets its all about labour costs.

And no, it isn't just the U.S. It is virtually everywhere in the world.


User currently offlinemayor From United States of America, joined Mar 2008, 10397 posts, RR: 14
Reply 14, posted (2 years 2 months 3 weeks 3 days 11 hours ago) and read 7774 times:

Quoting jfk777 (Reply 10):
AA owns American Eagle, Delta used to own ASA. In some cases airlines do own regionals.

Delta also owns Comair and used to have 20% of Skywest.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineapodino From United States of America, joined Apr 2005, 4263 posts, RR: 6
Reply 15, posted (2 years 2 months 3 weeks 3 days 10 hours ago) and read 7661 times:

Acording to Air Wisconsin CEO Jim Rankin at the recent RAA conference...the regionals are very concerned about finding enough pilots in the future with the ATP rule going into effect. If this is true...then basic economics will dictate that wages at the regionals will only increase. The question is...will it increase enough to make outsourcing uneconomical or csn the regionals even survive with economics working against them?

Side note...i believe Delta ALPA realizes what may be happening which is one reason they got their TA as quickly as they did


User currently offlineGoldenshield From United States of America, joined Jan 2001, 6015 posts, RR: 14
Reply 16, posted (2 years 2 months 3 weeks 3 days 10 hours ago) and read 7600 times:

Quoting mayor (Reply 14):
Delta also owns Comair and used to have 20% of Skywest

20% is not a controlling (and therefore, owned) interest. SkyWest was still free to do what it wanted with its airplanes. All it meant, really, was that they had a vested interest in making sure the airline was successful at the time. It's the same deal with the money SkyWest poured into TRIP's stock.

[Edited 2012-06-07 11:50:16]


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User currently offlinerampart From United States of America, joined Aug 2005, 3127 posts, RR: 6
Reply 17, posted (2 years 2 months 3 weeks 3 days 9 hours ago) and read 7436 times:

Quoting Goldenshield (Reply 16):
All it meant, really, was that they had a vested interest in making sure the airline was successful at the time.

   Majors have invested in regionals, but many examples of regionals investing in majors, sometimes to support or jumpstart out of reorganization. Mesa did this with America West, I believe. Republic has done it recently. Cross Air essentially became Swiss Air.

-Rampart


User currently offlineMEA-707 From Netherlands, joined Nov 1999, 4320 posts, RR: 36
Reply 18, posted (2 years 2 months 3 weeks 3 days 9 hours ago) and read 7341 times:

OK it's mostly about labour costs... But neither KLM or United or anyone is paying a junior cleaner the same as their CEO, so what stops them from paying the Regional Jet pilots and staff the same (lower) wage as what they make now with the regional airlines logo on their salary slips? Why can't for instance KLM Cityhopper Fokker crew rampers and other staff remain in the same salary scales if they integrate the fleet into mainline KLM. You can even ration that rampers, check in and planning staff, flight attendants etc. make less money while doing the regional jets because these jobs are simpler then long haul. Apparently the regionals are still popular enough to attract people to work for lower wages then mainlines, so why not just offer the same step in salaries as mainline for the same job?


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User currently offlinecloudboy From United States of America, joined Jan 2004, 815 posts, RR: 0
Reply 19, posted (2 years 2 months 3 weeks 3 days 9 hours ago) and read 7309 times:

So what kind of controls do the majors have over the regoinals? If they are not the main carrier, and thus can do their own level of service, aircraft, etc., why not just let them fly under their own banner and not have to worry about a bad image? Or do the regoinals not have any choice of aircraft and service levels?


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User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 20, posted (2 years 2 months 3 weeks 3 days 8 hours ago) and read 7212 times:

Quoting cloudboy (Reply 19):

So what kind of controls do the majors have over the regoinals? If they are not the main carrier, and thus can do their own level of service, aircraft, etc., why not just let them fly under their own banner and not have to worry about a bad image? Or do the regoinals not have any choice of aircraft and service levels?

Any regional carrier that is under contract to operate on behalf of an airline under that airlines' "Connection" or "Express" had to make their operations as similar to the mainline service as possible. You won't see an ExpressJet crew operating as Delta Connection wearing the uniform used for United Express flights. You also won't see an a/c in United Express colors and titles operating a Delta Connection flight. Some regional airlines do have some a/c that are in a plain livery or a corporate livery that are used interchangeably between the various airlines they do service for.

Years ago you did have Delta Connection operators that flew under their own colors and their name/logo was prominently placed on the a/c:


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Then they had variations of the DL livery that included Delta Connection titles but had the airline's name on the tail:


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User currently offlinebobloblaw From United States of America, joined Jan 2012, 1714 posts, RR: 1
Reply 21, posted (2 years 2 months 3 weeks 3 days 6 hours ago) and read 7008 times:
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Mainline carriers like to pit regionals against one another when it comes to bidding on flying

Also some airlines like UAL have it written into their contracts that if they have wholly owned regionals, they have to staff them with mainline FAs. At least that rule use to exist.


User currently offlinemayor From United States of America, joined Mar 2008, 10397 posts, RR: 14
Reply 22, posted (2 years 2 months 3 weeks 3 days 5 hours ago) and read 6442 times:

Quoting Goldenshield (Reply 16):

20% is not a controlling (and therefore, owned) interest. SkyWest was still free to do what it wanted with its airplanes.

I realize that, but DL still had control over what Skywest did with their a/c, subject to the terms of the DL Connection contract they were under.

Quoting srbmod (Reply 20):
You won't see an ExpressJet crew operating as Delta Connection wearing the uniform used for United Express flights.

Skywest crew (pilots/FA) wear a Skywest uniform.

Quoting MEA-707 (Reply 18):
You can even ration that rampers, check in and planning staff, flight attendants etc. make less money while doing the regional jets because these jobs are simpler then long haul.

In some cities, DL rampers/gate agents, etc. do the ground handling for the regionals at normal DL pay rates.

Quoting bobloblaw (Reply 21):
Also some airlines like UAL have it written into their contracts that if they have wholly owned regionals, they have to staff them with mainline FAs. At least that rule use to exist.

Does UA HAVE any wholly owned regionals, anymore?



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineGoldenshield From United States of America, joined Jan 2001, 6015 posts, RR: 14
Reply 23, posted (2 years 2 months 3 weeks 3 days 5 hours ago) and read 6341 times:

Quoting mayor (Reply 22):
I realize that, but DL still had control over what Skywest did with their a/c, subject to the terms of the DL Connection contract they were under.

Only the jets, and back before 2000, there weren't many jets, and Delta, for some reason, couldn't manage fleet management and pricing of the turboprops (So I Hear. This was before my time.)



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User currently offlinemayor From United States of America, joined Mar 2008, 10397 posts, RR: 14
Reply 24, posted (2 years 2 months 3 weeks 3 days 5 hours ago) and read 6209 times:

Quoting Goldenshield (Reply 23):
Only the jets, and back before 2000, there weren't many jets, and Delta, for some reason, couldn't manage fleet management and pricing of the turboprops (So I Hear. This was before my time.)

DL's first regional affiliate was Ransome Airlines in the northeast.........they had virtually no "control" over Ransome but they didn't think they needed any........all of a sudden PanAm bought Ransome out from under DL and that was that. After that, DL liked to have some sort of interest in the regional.......i.e. they originally had 20% of Comair and ASA before buying all of them....and the aforementioned 20% of Skywest.

I forget what year the Comair pilots' strike was, but that also had a bearing on what DL did with the regionals......they decided that they didn't want all their eggs in one basket at the hubs. I know in SLC, we started getting Comair to operate some of the routes that were previously operated by Skywest.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
25 Logos : As far as I know, they never did. US, DL, pmNW, pmCO and AA did, but never UA. Cheers, Dave in Orlando
26 N62NA : Why Don't Airlines Operate Their Own Regional Ops? It's gotten to the point of ridiculousness in the USA. Flights from EWR to OMA are hardly "regional
27 toltommy : I believe UA owned AirWis briefly, but was forced to sell it due to a scope violation of the flight attendant contract. IIRC, Delta made an attempt t
28 something : What do you think LH is doing with OS right now? Airlines have payscales and unions to deal with, that fight for these economically unfeasible paysca
29 Post contains images N62NA : I don't know (which is why I limited my comments to the USA).
30 mayor : You can hardly blame the legacy airlines for the way that the terms are used.........they didn't label themselves and they didn't label the "regional
31 irelayer : I have a question. Who buys, leases, and maintains the aircraft? -IR
32 JQflightie : Well think of it, most airlines worldwide started off as 'Mainline' carriers, and then accumulated small 'Commuter' Airlines. Which usually had a chea
33 drgmobile : To do this would require negotiating contracts with pilots that included lower wage scales. After much negotiation you might be able to make some pro
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