american eagle, mesaba, piedmont, psa, lynx, just to name a few.....are the mother ships to these carriers just going to one day say, "lets pull the plug?" im not intending to start a war here, just seems like that is the status quo. your thoughts everyone?

 

status quo? How did you come to that conclusion?

 

There are too many RJ's in the system right now...there will be adjustments. I really don't think one regional is more likely to get hacked than another...but don't ever underestimate pitting one against the other to save money. Yes, some will disappear.

 

Of course owned companies are going away. It's a lot cheaper to sell off the long under-performing loss leader under a false pretense of a long-term contract, then use an airline holding company to low-ball the rate of the previously owned company. Thus the previously owned company is now truly OWNED.

Welcome to the new economy. Sell off and spin off whatever possible to make a short term buck.

 

Did you forget XJT? Spun off and replaced by CHQ and Colgan once the time and money was right?

 

INCONCEIVABLE!!

 

I blame SNES for distracting me from the more important things in life..

 

Regionals have had explosive growth (too much) and will need to be trimmed back considerably That being said, there will still be a need for small jets/props to be flown for feeding mainline carriers. I think it would be more profitable for a carrier to own the majority of their feed, while contracting a third party to do a small portion and whipsaw against the wholly owned carrier.

If a mainline owns their regional and they pay the wholly owned regional carrier X amount of dollars to perform flying then essentially they are paying themselves (same parent company does both mainline and regional flying). If that same mainline carrier pays a third party to do the flying then that cash is gone from their pocket completely. IMHO, even if the wholly owned regional carrier has a small operating loss then it would still be better than paying a third party(as long as the wholly owned carrier loss is less than the cost of contracting an outsider).

Also, wholly owned carriers dont require contracts for the flying they perform and can be moved around at will of the mainline carrier in and out of markets without notice or penalty. They can serve as an effective tool to explore new markets for future mainline service, without having to send an MD80 or 737 in to test the waters.

There is a reason RAH is moving away from regional contract flying, probably because the growth is gone from that sector and it is time to move onto a new way of making money.

 

Short term, yes. Right now with so many of the long term fee for departure type contracts the only easy/cheap place to make cuts is the wholly owneds. Once these outsourced contracts start expiring, you will likely see them not renewed then some of that flying will be brought back to the WO's and some will simply disappear.
Short term it seems better to be at the contract carriers, long term not so much.

 

look - it's all about frequency. RJ's are sanwiched in between mainline to keep up the frequency or:
provide thin markets at an elevated price. now I ask you, if the market is down in general does this generate more thin markets or less?
the answer - more(yes some get too thin and vanish). Even though RJ's cost 2x more to operate, they keep fares higher by offering fewer seats. the market forces take over and the bidding for those seats determine the viability of that market. if pax are willing to pay then it continues. an old trick/strategy for raising fares has always been to scale down in order to force the bidding to begin. I predict a short time when this adjustment will play out - it is anybodies guess (even Boyd) how it ends up. Look for mainline replacement for awhile followed by the tired refrain that RJ's are taking jobs from the mainline, then in the aftermath a revised network will appear. The only thing that skews this is gov intervention in the form of subsidies. This phenomena historically has taken the form of EAS but now many communities are buying into a local form of the same stripe.