You guys hit it home perfectly. Just because the ticket price for the RJ, to bring a passenger into a hub, may not cover the cost of the flight to operate, you must factor in the amount the airline probably is charging for that passenger to connect on a mainline flight, particularly international.
The mainline guys know what they are doing. They operate the right size airplane on a route that best suites the cost of operating it. If the route can only sustain 50 seats, it would cost more to operate a 70 seater on it.
As for running three 50-seaters on a route instead of a 150 seat 737, you must take into account that they need that frequency due to different connections those passengers bought tickets on throughout the day. Mainline may be better off because of this since they now can offer more flights themselves, because they have maximized the passengers they have brought into their hub.
Originally Posted by
HSLD
There is a context that one must understand when saying RJ's are not profitable - and that's how they are deployed under fee per departure agreements.
Consider that most RJ's are operated in fee-per-departure arrangements with fuel being a pass-through expense. This means that RJ operators get paid a set fee to operate the flight and don't pay for the gas.
For the purchaser (the UAL, NWA, DAL's of the world) the fee-per-departure model is a money loser when oil is at $100/barrel. RJ's are on the cost side of the balance sheet to be certain. The question is; what is the feed worth to the network?
For a network operator, an RJ flight might cost $4000 to operate (fee+fuel) but only yield $3000 in revenue (hypothetical round numbers). From a network operator's perspective RJ's are "unprofitable" with fuel at current levels and pass-through agreements.
Originally Posted by
ExperimentalAB
Very true...a point not mentioned yet. The regionals are around for feed...What is the value of the feed? Those connecting pax's may bring an RJ, micro-speaking (operating in the red or at slim margin), into the black, in macro-terms.
Additionally, if United were to say that they no longer wanted to service ORD-DSM, for example...Those customers that were flying into ORD for international or other money-making routes may choose American and their Eagle feed instead.