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Could regionals grow while majors shrink

Old 12-08-2012, 12:59 PM
  #31  
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Sadly it's just a matter of time before another airline goes bankrupt and Mr. CEO goes to the bankruptcy judge to have the RJ CAP thrown out.
Nail on the HEAD!!! ^^^ This

Short, sweet and accurate...
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Old 12-08-2012, 01:00 PM
  #32  
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In answer to your question, because this is an interesting question- I think it depends. I think it is tied to three factors. Scope policy's at airlines, Pilot Compensation, and aircraft being manufactured.

Scope policy has obvious ramifications. At Delta the total pie for Regional Aircraft will shrink from roughly 550 Regional aircraft down to 450 total shells. At American with their new Contract we expect them to go from 270 Regional Aircraft up to 320 or so in the next couple of years, maybe higher if their domestic fleet increases. If United's TA passes they might see a small rise in RJ's to bring their fleet up to 120% of mainline block hours. Otherwise fleet totals for United would stay about the same, unless they were to order a new narrow-body aircraft. So with Scope we might see a small reduction in Total regional flying initially.

Pilot Compensation's effect is a little less noticeable. If market forces drive Pilot compensation at Regionals high enough we could see many of the Major's choose to do the larger Regional flying themselves. I think there is no coincidence that almost all of the new CRJ 900's that Delta has ordered in the last 5 years have been wholly owned, giving them more control over aircraft placement. This factor really depends on whether Student Pilots are still willing to work for 19-35 thousand a year for 4-5 years after investing 80-220,000 $. If students are willing to accept the ultra low rate of return then this factor is a non event.

Currently there are no <50 seat Jets being manufactured or even on the drawing board, this is perhaps the biggest threat to the Regionals. On top of this no one is manufacturing small turbo props. With Regionals stuck between a fairly solid cap at 76 seats at the major partners (with specific aircraft limits) and disappearing hardware at the bottom end, they are left with a very small and shrinking business niche.

These three factors place the Regional's in a precarious position. A position that has caused some level of desperation amongst management teams in the past few years, ie bidding for flying below cost to live another day etc. These moves have not gone well for obvious reasons. Skywest INC probably stands in best position of all the Regional's to absorb the most Regional capacity as the total Regional pie stagnates or shrinks. This is primarily due to economies of Scale, flexibility, a seasoned/reliable product, opportunity discipline(trying to take only flying that would be profitable), allowing them to remain competitive while still compensating in a way that will be leading in the Regional industry. These factors make them the best insulated of the Regional's, but not immune to these problems.

It is likely a couple of Regional airlines will grow, while many will shrink or disappear. Mostly due to these factors and how regional airline management teams have been and will handle them in the future.
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Old 12-08-2012, 01:01 PM
  #33  
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Quiz time: What airline corporation has the world's largest fleet of aircraft?
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Old 12-08-2012, 01:05 PM
  #34  
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Originally Posted by johnso29 View Post
How long did it take for NWA to go BK? Delta? United? American? I'd say it could be a very long time before it happens again. It took a very long time to happen initially. You're now looking at a lot of Legacy airlines with little to no pension debt(which was a huge amount of BK debt).
I agree, bankruptcy days are over for the legacies, they have shed the legacy costs that drove them there. But I also think the aircraft are getting bigger and newer which may shrink the mainlines a bit more over the next 5 years. For example, the 717/MD90's are obviously place holders till the next gen planes have the bugs worked out.
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Old 12-08-2012, 01:54 PM
  #35  
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Originally Posted by johnso29 View Post
With all the regional pilots out there, do you honestly think the Majors will become starved for pilots? I think many regional pilots are starving to leave their regional for a major.
I agree. And let's not forget about all the LCCs that sit somewhere between a regional and major - Spirit, Virgin America, JetBlue, and Allegiant. These airlines are full of well qualified guys with thousands of hours of jet PIC, and a huge number are going to be flocking to the majors given the chance.

Guys keep talking about the day when the big boys won't want 1000tpic anymore, but I think that day is a loooong way away.
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Old 12-08-2012, 02:31 PM
  #36  
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Originally Posted by JoeMerchant View Post
Quiz time: What airline corporation has the world's largest fleet of aircraft?
Skywest Inc, with 727 aircraft, operates the world's largest fleet
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Old 12-08-2012, 02:36 PM
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Oh snap....
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Old 12-08-2012, 02:45 PM
  #38  
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Originally Posted by Trip7 View Post
Skywest Inc, with 727 aircraft, operates the world's largest fleet
Winner....Chicken for dinner...

Not bad for just a "regional".....
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Old 12-08-2012, 03:45 PM
  #39  
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Originally Posted by johnso29 View Post
How long did it take for NWA to go BK? Delta? United? American? I'd say it could be a very long time before it happens again. It took a very long time to happen initially. You're now looking at a lot of Legacy airlines with little to no pension debt(which was a huge amount of BK debt).
I see the point you're making, but lets note that the NWA, DAL, and AA bankruptcies were all shams. They filed bk with billions of dollars of cash and assets on hand. It was solely done to "shed legacy costs" (drop pensions and slash union contracts), and "reorganize the airline". Delta could easily be taken back into bankruptcy if it suited their business plan. And also let's not forget about "forced manure". All it takes is a war event hitting a little too close to home.
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Old 12-08-2012, 03:50 PM
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How many of those are inefficient 50 seaters the majors want to retire?
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