Originally Posted by
rickair7777
Not really. Those regionals are in multi-year (sometimes decade+) contracts with their major partners...they typically can't pass the costs on to their customer. They can probably afford to pay new hires $26K instead of $23K but beyond that they will lose their collective butts. Unless the major partners, out of the goodness of their heats, decide to give the regionals a bigger allowance to cover the difference.
If enough flights cancel I suppose that might happen but since we still have vast numbers of 50-seaters to purge the majors may prefer to let nature take it's course: Broke regionals lose their contracts and shut down, flush regionals take over 70-seaters as needed and operate at a loss effectively transferring their cash reserves to mainline. If the surviving regionals, operating all 70+ seaters, eventually get to the point where THEY have to liquidate then the majors would have to step in and pony up. But they might be willing to let the bloodbath happen if they think they can manage the fallout (schedule disruptions).
The balls to keep your eye on are the 50-seat inventory and the savings accounts of the bigger regionals.
Your prediction that a few regionals working on smaller contract margins will fold is probably right, and we see Great Lakes going down the tube as we speak. But the bigger issue than wage caps imposed by existing contracts is a genuine fear by these companies of major cost hikes. They fear it will be unsustainable. Per the example seen in the trucking industry however, where we see a doubling of wages can lead to greater sustainability, they may choose this path and find the solution they need to remain viable. In the short run they will lose money but in long term they will have a stronger position by raising wages drastically.