kaitak744
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Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 8:59 am

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?
 
B738FlyUIA
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 9:05 am

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.
 
kaitak744
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 9:09 am

Ok. I don't understand why those flights cannot be done by the airline it self under its own name.
 
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817Dreamliiner
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 9:10 am

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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usflyer msp
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 9:15 am

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.
 
B738FlyUIA
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 9:16 am

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
 
Pelle
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 10:18 am

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

Regional Airlines Vs Mega-airlines (by Pelle May 1 2012 in Civil Aviation)
DHC6 CRJ700 ERJ190 737 733 735 738 752 763 772 77W 744 A319 A320 A321 A333 A346
 
BrouAviation
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 10:26 am

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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Aesma
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 10:53 am

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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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 11:05 am

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...
 
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 11:43 am

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.
 
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 11:53 am

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.
 
BMI727
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 12:13 pm

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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drgmobile
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 5:31 pm

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.
 
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mayor
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 6:03 pm

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.
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apodino
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 6:35 pm

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
 
Goldenshield
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 6:44 pm

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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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 7:35 pm

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.

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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 8:07 pm

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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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 8:15 pm

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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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 8:49 pm

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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Bobloblaw
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 10:29 pm

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.
 
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mayor
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 11:39 pm

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?
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Goldenshield
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Thu Jun 07, 2012 11:50 pm

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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mayor
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 12:01 am

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.
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 12:04 am

Quoting mayor (Reply 22):
Does UA HAVE any wholly owned regionals, anymore?

As far as I know, they never did. US, DL, pmNW, pmCO and AA did, but never UA.

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N62NA
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 1:07 am

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" yet they are operated by a "regional" airline.

The "majors" (and I'm just speaking in the USA) would outsource all their flying if they could - "regionals" account for a much larger chunk of domestic operations today than just a decade ago. The trend will (unfortunately) continue.
 
toltommy
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 1:17 am

Quoting Logos (Reply 25):
As far as I know, they never did. US, DL, pmNW, pmCO and AA did, but never UA.

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 to bring regional flying under the mainline umbrella in the early days of Comair. But the mainline pilots objected (don't remember if it was pay or seniority integration that stopped the deal), so Delta placed the flying at Comair, and later bought the carrier.

Air Canada did reach such a deal with their pilots, and the first CL-65s (apparently thats metric for CRJ-200 hehe) were flown by mainline AC pilots. But by the time subsequent contracts came along, it was too expensive for mainline to continue to operate the plane, so they were moved to Jazz.
 
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 1:33 am

Quoting N62NA (Reply 26):
The "majors" (and I'm just speaking in the USA) would outsource all their flying if they could - "regionals" account for a much larger chunk of domestic operations today than just a decade ago. The trend will (unfortunately) continue.

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 payscales. All these structures are grown and in many cases anachronistic. So you found a new company, or have somebody else do it for you, that has the chance to start from scratch.

But there lies a risk. You lose control over your own operations and become dependent on a supplier.

Low cost carriers, like Germanwings by LH, or Transavia France by Air France, or Iberia Express by Iberia, are basically doing the exact same thing on another level. There are markets that can't sustain mainline prices, don't demand mainline service and therefore, can't pay mainline bills. Staff won't agree to pay cuts so a new company is founded, old staff gets fired and new staff gets hired under the new contracts.
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N62NA
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 1:53 am

Quoting something (Reply 28):
What do you think LH is doing with OS right now?

I don't know (which is why I limited my comments to the USA).  
 
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mayor
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 3:18 am

Quoting N62NA (Reply 26):
Flights from EWR to OMA are hardly "regional" yet they are operated by a "regional" airline.

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 "regionals" as regional. We used to call the regionals, "commuter carriers" and back then, airlines like Southern, North Central, Piedmont, etc. were "regionals". Heck, when I started with DL in '71, with the exception of the flights from ATL to the west coast, we were pretty much a regional airline, even after the merger with Northeast.
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irelayer
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 4:23 am

I have a question. Who buys, leases, and maintains the aircraft?

-IR
 
JQflightie
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 6:42 am

Well think of it, most airlines worldwide started off as 'Mainline' carriers, and then accumulated small 'Commuter' Airlines. Which usually had a cheaper cost base and i guess more flexibility. eg: The airline i work for, im mainline, it wouldnt be operationally viable with the contract i have, as i wouldnt be able to do most flights as duty hours limit me, and in most cases regional carriers and their crew can operate more sectors then i can for alot less money. Also, for me, it comes down to the number of aircraft being endorsed on. Its not a safe operation when you would have to operate the whole fleet. eg: if my airline ran all its ops with the one crew pool, i would be trined on Dash 8-200/300, Dash 8 Q400, B717, B737-400, B737-800, B767-300 (both our variations GE and RR are very different) A330-200, A330-300. That is alot of aircraft to getr confused on.
I believe that, up until recently and with the announcement of FlyBe Nordic, AY operated both thier Mainline and Regional aircrafts.
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drgmobile
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RE: Why Don't Airlines Operate Their Own Regional Ops?

Fri Jun 08, 2012 2:38 pm

Quoting MEA-707 (Reply 18):
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?

To do this would require negotiating contracts with pilots that included lower wage scales. After much negotiation you might be able to make some progress, but you'd never ever get the union that has members getting paid 747-level wages to accept a wage scale for its members as low as that of a labour group at a separate airline that operates turboprops. And its more than just wage scales. Just as important are work rules.