Regionals replacing the Majors or regionals going away?
 

Some regionals are making nice profits. Could this mean that regionals could out grow majors. I might have misunderstood the article. Is this good or bad for regionals?
http://www.forbes.com/2008/06/02/avi...regionals.html

this writer has very little understanding of the way in which major airlines use regional airlines.

most regionals get guaranteed profits that's how they make their money. if they gain flying more profits. if they lose flying smaller profits or a loss. the 2 regionals that tried to go it alone lost or are losing big time. aca (independence) and expressjet.

Just wait until the majors start making the regionals pay their own fuel bills. Things could very easily start going back to the way the "feeders" used to do business. XJT already started it back up again with some of the DAL flying out of LAX. Some of that flying is pro-rate and XJT is responsible for fuel and in some cases advertising. If the route isnt profitable neither is xjt, if it is then they both make money. Unlike today where if the planes are empty the regional still makes money as long as they complete the flights.

I'm not sure the majors will go that route. If they had to pay for their own fuel, regionals are not going to sign a contract that guarantees financial losses...they will raise their prices to cover fuel. Additionally, based on recent events, they will likely add some extra on top of that to account for unforseen fuel price hikes...sort of like hedging.

This means that majors who force their feeders to pay for fuel will have to pay a premium, putting them at a competetive disadavantage. Other majors might decide to just better manage their fuel price situation (hedging, etc), and take advantage of lower-priced feed.

Regionals are not in the business of participating in the marketplace...they are are very effecient (well in some cases) technical specialists. The general contractor worries about all the subs and the price of materiels. The drywall guy just installs the drywall...he doesn't usually provide it, or take economic risk based on it's market price.

Some regional airframes and flying will go away, while other, larger regional airframes will start replacing mainline narrowbodies.

Growth at any regional at the expense of the mainline partner might be good for one's career short-term via a quick upgrade, but it is VERY bad long-term...unless you intend on being a regional lifer. And regional airlines don't like lifers...they raise the average crew cost with each year of longevity, making them less competitive when compared to companies with lower average longevity.

Both the majors and the regionals will go away.

Your positive outlook for your job fascinates me. I wish I had the same positive outlook, but unfortunately I am a realist. Do you really think that a major airline will sign a contract with a regional that guarantees the major financial losses? Why do you think delta is trying to get rid of Mesa, AA is reducing Eagle's flying, Horizon is going to an all TP fleet, Frontier dropped RAH all-together, and CAL is reducing XJT's flying and replacing some of it with TP's.

If the price of the installed drywall is so much that the value of the home is less than the amount invested to build it, then the general contractor would put in some sweet 80's paneling instead. The writing is on the wall (no pun intended).

Flex

I see the regionals going back to their roots. Turboprops flying pax to hubs so they can connect to bigger mainliners. Only difference now is that they will be bigger props going to bigger mainliners but less frequently and full to the gills. Just my 2 cents.

I hope you are right for the sake of this industry.