Airline Pilot Central Forums - Regionals Merging / Consolidating

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The rumor I've heard was Republic buying TSH. Keeping Compass aircraft, using the rest of the company for more pilots. I don't know how solid it is I've heard rumblings from both the TSH and Republic sides.

Quote:

Originally Posted by Eseloco954 (Post 2509887)

Sorry meant TSH..anybody got some solid insight? Or is it all hearsay

This Friday!

It's sad watching us all spout word for word the same rumors that some white knight is riding in to save us. "The FA's boyfriend's room mate's sister's lesbian girlfriend's father's mistress has a gardener whose step son is a janitor at UAL headquarters and he says it's a done deal." When it doesn't happen it's always the same boogie men who thwarted our seniority number at _________. XYZ airline had first refusal; the FA union; the pilot MEC chairman; SkyWest asked for too much money.
Folks, it isn't happening.

I think there are 2-3 important details missing from this discussion:

1) The regionals exist to provide service to a major at a price the major thinks is worth the cost. If cost weren’t a factor, the major could fly the smaller airplanes directly with its own pilots on a noticeably higher pay scale. The fact that second year FOs at AA, DAL, SWA, or UAL make more than regional captains by a wide margin is a clue on cost.

2) The evolution of the wholly owned regionals gives a major a lot of leverage to protect their brand AND exercise leverage against other regionals in service contract prices, consequences for performance metrics, etc. All with the ability to make changes in the regional support routes and network without having to renegotiate expensive changes to service contracts with a non wholly owned regional.

3) A wholly owned regional has financial backing for growth that no other regional can match, allowing them to make business plays that would otherwise be out of reach. For example, Delta cancels XJT service contract, takes the CRJ900 fleet and gives it to 9E, then let’s 9E hire former XJT pilots to help staff the growth. Those pilots that want to stay in ATL took a huge pay and seniority cut to join 9E, 9E hires street captains that were experienced and easy to train, and there were no messy wrestling matches to merge seniority lists, etc.

If DAL can effectively kill part of a regional by ending its service contract, shift or acquire airplanes for cheap from a regional that no longer has a customer, and then pick up experienced aircrew that are newly available, how long before other non wholly owned regionals that only have one customer die a similar death?

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Boeing buying Embraer, Airbus owns Bombardier

The larger "regional" jets are coming, from Embraer, Bombardier, Mitsubishi. These aircraft carry as many people as the DC-9 and early model 737s, albeit with somewhat reduced range. Boeing and Airbus have now tossed their considerable weight behind these programs. SOMEONE will be flying these aircraft in those markets where they make sense, because they are about a 20% fuel savings over other aircraft in the niche they were designed for. Currently what is holding them up is scope agreements. I picture one of several things happening.

1. They become entry level mainline flying.
2. Mainline pilots trade away scope to allow these aircraft to be flown by their codeshare regionals.
3. Someone builds a super regional, perhaps cobbled together from a couple of the non-mainline owned regionals, that isn't limited by scope contract language, maybe an Amazon Prime Air, that will dominate this niche of the market.
4. Some mainline with no scope limitations, such as Alaska, has their regional start flying these aircraft.

Nature hates a vacuum and so does business. With Boeing and Airbus now both backing bigger Embraers and Bombardiers, it WILL happen.

Quote:

Originally Posted by Excargodog (Post 2601310)

Great forecast... if it were 1997.

Embraer and Bombardier have been building large RJ's for decades. They have been flying at regionals for decades. The mainline flying was shifted to the regionals, and the FFD industry grew and grew until it became over 1/2 the departures each day. They already call the E175 a Guppy Killer, and for good reason. It's taken more mainline 737 and 319 flying down to the regional level than pilot groups anticipated. With companies like AA reducing Lav size to less than an old style phone booth to squeeze in more seats, these E175's are rapidly becoming the much more comfortable plane to fly on for passengers.

You won't see scope relief again. That regional growth should have been more mainline jobs had it not been for the scope giveaway. That contributed to the killing of mainline upgrades and growth for almost 10 years. You won't see additional scope relief.... further, with the pilot shortage over the next ten years there won't be anybody to fly them at the regionals anyway. There will be lots of regional industry contraction and acquisitions... (notice I did not say mergers) the wholly owned regionals will wait for the bankruptcies and buy the other regionals for the staffing, getting all the equipment for pennies on the dollar. Because they buy it in liquidation there won't be merger rights protections for the pilots; they'll simply be furloughed from the dying carrier and offered employment at the new one... recycling themselves at year one pay.
The wholly owned regionals will be given an even larger percentage of flow through mainline hiring as a means to force pilots to fly their regional feed for the opportunity of a mainline job. When 90% of all mainline new hires come directly from their owned regionals, you either fly for the WO career path you want, or fight with everybody else for that small 10% off the street window which will be friends, family and military direct hires. Good luck. This makes the WO regionals the entry level position to get to Delta, United & American.
That is where this is headed. That is how they will keep their WO staffed.
The only mergers could/would be among the several WO to form a single WO, much like AA did previously with all their "eagles."

Quote:

Originally Posted by Cujo665 (Post 2612339)

The wholly owned regionals will be given an even larger percentage of flow through mainline hiring as a means to force pilots to fly their regional feed for the opportunity of a mainline job. When 90% of all mainline new hires come directly from their owned regionals, you either fly for the WO career path you want, or fight with everybody else for that small 10% off the street window which will be friends, family and military direct hires. Good luck. This makes the WO regionals the entry level position to get to Delta, United & American.
That is where this is headed. That is how they will keep their WO staffed.
The only mergers could/would be among the several WO to form a single WO, much like AA did previously with all their "eagles."

Very insightful post, but one question, devil's advocate....

Why would the majors cannibalize their own WO regionals? Why not reduce the flow to a trickle and hire as much as they can from outside of their WO's in order to hurt their competition's WOs?

Quote:

Originally Posted by SonicFlyer (Post 2612362)

There are a couple of reasons.

The first is that they can more reliably staff their WO if there is a semi-reliable path to the mainline carrier. If you hire a new FO, upgrade that pilot 2-3 years later, then get another 2-4 years before moving on to mainline, it puts the WO in a much more stable position for predicting manning and hiring. That follow-on carrot can do a lot to attract and retain pilots and help control wages versus a non-WO that lacks a flow.

Secondly, having a flow does not preclude from hiring elsewhere, and because pilots tend to apply at more than one carrier, all of them (carriers) have automated application scoring systems that more or less act similarly, allowing all of them to hire off the street as well, including from competitors WOs.

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Please straighten me out if I’m missing something, but is your second point supporting or refuting your argument?

The name of the game for mainline/legacy carriers appears to be just enough bread & water to retain yet suppress their own regional pilots’ while offering something superior to other mainline/legacy carriers to poach regional pilots from other mainline/legacy carriers’ regional systems. Flow and guaranteed interviews/preferential hiring/etc seem to be a bunch of mularky of no substance that exists purely for regional recruiting; even Envoy’s flow is heavily metered with squirrel words that allow flow to be retarded greatly for ‘operational necessity’ of the regional operation, right?

2 major questions in my mind:
1). If a pilot wants to eventually fly for DL, are they better off going to Endeavor OR a regional who doesn’t do any flying for DL?
2). Out of the non-WO regionals, how many will cease to exist as independent entities and how fast will they go away? Republic (63-ish % owned by AA, UAL & DL total) seems like the only safe bet to survive at present time. I would put SkyWest in that same category, but it seems there’s a chance SkyWest finally becomes union in the not-too-distant future and that fundamentally alters a lot for them & creates a likely-rough transition for several years & the possibility that it never comes together as a union carrier. Mesa also seems likely to survive due to their size & cost advantages (could low compensation become Mesa’s greatest benefit to their pilot group when all is said & done??). CommutAir is unique given UAL’s 40% ownership so they’ll probably make it, even with a tiny pilot group. The 3 TSH companies (TSA, GoJet & Compass) look like they’re really up against it. ExpressJet seems destined for demise (could a unionized SkyWest be the best thing that ever happened to ExpressJet??). Air Wisconsin seems like anything but solid ground & will have to convince some combo of themselves, lenders & mainline/legacy carriers that there’s a future there to overcome the large barrier of being an all 50-seat fleet by finding their way into larger equipment somehow. Corvus & PenAir occupy a unique niche (Alaskan regionals) but it seems there’s a real chance one of them (likely PenAir?) gets cannibalized by the other unless AS somehow ensures they both survive to keep a whipsaw in place. I don’t know a whole lot about Silver, but I don’t see how they’ll be able to compete for pilots effectively for much longer. Are there any other non-WO regionals who should be discussed? Only Republic looks safe from chaos at current point in time!!!

Quote:

Originally Posted by Funk (Post 2612435)

Quote:

Originally Posted by fenix1 (Post 2658916)

Please straighten me out if I’m missing something, but is your second point supporting or refuting your argument?

The name of the game for mainline/legacy carriers appears to be just enough bread & water to retain yet suppress their own regional pilots’ while offering something superior to other mainline/legacy carriers to poach regional pilots from other mainline/legacy carriers’ regional systems. Flow and guaranteed interviews/preferential hiring/etc seem to be a bunch of mularky of no substance that exists purely for regional recruiting; even Envoy’s flow is heavily metered with squirrel words that allow flow to be retarded greatly for ‘operational necessity’ of the regional operation, right?

2 major questions in my mind:

1). If a pilot wants to eventually fly for DL, are they better off going to Endeavor OR a regional who doesn’t do any flying for DL?

2). Out of the non-WO regionals, how many will cease to exist as independent entities and how fast will they go away? Republic (63-ish % owned by AA, UAL & DL total) seems like the only safe bet to survive at present time. I would put SkyWest in that same category, but it seems there’s a chance SkyWest finally becomes union in the not-too-distant future and that fundamentally alters a lot for them & creates a likely-rough transition for several years & the possibility that it never comes together as a union carrier. Mesa also seems likely to survive due to their size & cost advantages (could low compensation become Mesa’s greatest benefit to their pilot group when all is said & done??). CommutAir is unique given UAL’s 40% ownership so they’ll probably make it, even with a tiny pilot group. The 3 TSH companies (TSA, GoJet & Compass) look like they’re really up against it. ExpressJet seems destined for demise (could a unionized SkyWest be the best thing that ever happened to ExpressJet??). Air Wisconsin seems like anything but solid ground & will have to convince some combo of themselves, lenders & mainline/legacy carriers that there’s a future there to overcome the large barrier of being an all 50-seat fleet by finding their way into larger equipment somehow. Corvus & PenAir occupy a unique niche (Alaskan regionals) but it seems there’s a real chance one of them (likely PenAir?) gets cannibalized by the other unless AS somehow ensures they both survive to keep a whipsaw in place. I don’t know a whole lot about Silver, but I don’t see how they’ll be able to compete for pilots effectively for much longer. Are there any other non-WO regionals who should be discussed? Only Republic looks safe from chaos at current point in time!!!

I think the more accurate description for regionals from a mainline perspective has a number of elements. One is, “moving people cheaper than with mainline pilots and planes.” That’s why you see scope clauses in mainline contracts with pilots’ unions, and a constant push by mainline carriers to get “scope relief.” They need the regionals to scoop up people and deliver them to airports where they can be moved as a larger group on a larger aircraft. Part of that is that customers show a preference for more departures per day, even if it means a smaller aircraft. The trick for a mainline carrier is metering between mainline and regional aircraft to match capacity to traffic from some locations. So in that regard, mainline carriers want to keep regionals cheap, which is a function of both aircraft and labor costs. Teasing flow or interviews is, in my mind, purely a low cost carrot to help stabilize labor at a regional. As you have noted, even a flow has caveats that can allow a mainline carrier to shut off the spigot. Now, to your questions:

1) Unknown, but I don’t think it makes a difference. Biggest factor will be strength of resume so that it gets scored high enough to trigger an interview, and then you need to be fully prepared for the interview. Interview promises are nice, but if you show up with a thin resume and compete against other pilots that got an interview based on a more competitive resume and a lot of work to get it that way, how do you think you are going to compare during that day’s interviews? Much virtual ink has already been spilled on the topic of misleading guidance from companies to pilots before arranged interviews and regarding pilots that showed up poorly prepared. Don’t be that clown is all I can say.

2) If I knew the answer to that detailed and complicated question, I might put in my candidacy to run for the position of the Omnipotent and Almighty.

YMMV

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