Can regionals survive w/o mainline contract
#21
It depends, but the odds are against it. Independence Air made the mistake of attemting to compete against United with an uncompetitive aircraft. For a regional-sized airline to survive, they'd have to find a niche market where the only other competition is like-sized aircraft or none at all.
Can a mainline airline survive global competition with a codeshare alliance? I think the answer is the same for similar reasons. A mutually supporting network of aircraft and routes allows an airline group to compete against other airline groups and are superior to stand alone airline systems. Even mighty Southwest can't compete in the international travel market from the USA to Europe or Asia. Eventually they might. If they do, it will be through codeshares.
Can a mainline airline survive global competition with a codeshare alliance? I think the answer is the same for similar reasons. A mutually supporting network of aircraft and routes allows an airline group to compete against other airline groups and are superior to stand alone airline systems. Even mighty Southwest can't compete in the international travel market from the USA to Europe or Asia. Eventually they might. If they do, it will be through codeshares.
#22
I think majors can survive without the regionals, case in point SWA, but it would be extremely difficult for regionals to survive without the majors. If regionals can have the right combination of aircraft type and large amounts of capital to start out with like JetBlue, it might be possible to survive.
#23
What a regional would need to succeed as a stand alone carrier:
Efficient Aircraft-
Short segments have to be flown on turboprops, unless demand dictates a large RJ. You would need jets at CR9/E175 size or greater. 70 seats, 50 seat, 35 seats on a jet just won't pay the bills. Not to mention, these smaller RJ's have enough limitations to make for a level of customer service that a new airline could not tolerate. As for props, the bigger the better. I think an ideal regional stand alone fleet would be made of Dash 8 300's and E 175/190 aircraft. Both types are roomy for their "genre", and very capable.
Point to Point route structure-
Skip the hubs and fly people where they want to go. You don't need every passenger, but pick who you want and make them happy. If your product is good enough, people will drive to your point of departure. Also, hubs lead to so many missed bags, missed connections, and "delays beyond our control". These are all detrimental to developing a customer base.
Large market internet sales and advertising-
You need to start out on expedia, et al. if no one can find you, you won't sell tickets.
Appropriate fleet size-
You can't start out with 80 airplanes on day one. Add planes as you add service. Independence started out way too big. You need to to fill all those seats...
The biggest downside to starting up is that no one knows who you are. People won't save $5 a ticket by booking on an unknown airline, unless you are giving them exactly what they want.
By reading the above criteria (props, jets over 86 seats, point to point route structure, focused market share), you end up seeing the model of most US domestic airlines in the 70's and 80's. This worked. Everything went to pot when the jets got smaller and the props went away. The RJ was a noble appeal to the customer, saying here is a jet to replace those noisy props you don't like. But, the RJ wiped out BOTH smaller mainline aircraft AND newer, more efficient Prop regional aircraft. Imagine fleets of Q400's and Saab 2000's and ATR 72's kicking it through the northeast and deep south, flying faster at the lower altitudes, out of the way of the faster jets. Thanks Delta.
Efficient Aircraft-
Short segments have to be flown on turboprops, unless demand dictates a large RJ. You would need jets at CR9/E175 size or greater. 70 seats, 50 seat, 35 seats on a jet just won't pay the bills. Not to mention, these smaller RJ's have enough limitations to make for a level of customer service that a new airline could not tolerate. As for props, the bigger the better. I think an ideal regional stand alone fleet would be made of Dash 8 300's and E 175/190 aircraft. Both types are roomy for their "genre", and very capable.
Point to Point route structure-
Skip the hubs and fly people where they want to go. You don't need every passenger, but pick who you want and make them happy. If your product is good enough, people will drive to your point of departure. Also, hubs lead to so many missed bags, missed connections, and "delays beyond our control". These are all detrimental to developing a customer base.
Large market internet sales and advertising-
You need to start out on expedia, et al. if no one can find you, you won't sell tickets.
Appropriate fleet size-
You can't start out with 80 airplanes on day one. Add planes as you add service. Independence started out way too big. You need to to fill all those seats...
The biggest downside to starting up is that no one knows who you are. People won't save $5 a ticket by booking on an unknown airline, unless you are giving them exactly what they want.
By reading the above criteria (props, jets over 86 seats, point to point route structure, focused market share), you end up seeing the model of most US domestic airlines in the 70's and 80's. This worked. Everything went to pot when the jets got smaller and the props went away. The RJ was a noble appeal to the customer, saying here is a jet to replace those noisy props you don't like. But, the RJ wiped out BOTH smaller mainline aircraft AND newer, more efficient Prop regional aircraft. Imagine fleets of Q400's and Saab 2000's and ATR 72's kicking it through the northeast and deep south, flying faster at the lower altitudes, out of the way of the faster jets. Thanks Delta.
#27
Gets Weekends Off
Joined APC: Jul 2007
Posts: 390
Cape Air is a very small niche outfit operating on a few non-competitive routes. It's irrelevant to compare a C402 prop outfit to a regional jet carrier. In fact it's really incorrect to call some outfits like American Eagle "Regionals." They are major airlines in their own rights and with their low-pay compensation to employees, competing, in many ways, directly with their mainlines.
The fact is that the 50 seat jet has never been economically viable without being subsidized by a mainline carrier. If fuel spikes again, they're really scrap aluminum then. Now what the execs are doing is to continue to "redefine" what a "regional" jet is, and specifically want to condition pilots to believe that a 76-100 seat airplane flying halfway across the U.S. is a "regional" jet. Of course that is a lie, but such is the ethics of business executives. It's an exercise in perception management and desensitization that some regional pilots are eager to buy. So in the end, mainlines are subsidizing their low-pay carriers, making them look profitable, and at the same time generating losses that make for an excuse to drive down mainline compensation towards low-pay carrier standards. It really is a brilliant strategy.
The fact is that the 50 seat jet has never been economically viable without being subsidized by a mainline carrier. If fuel spikes again, they're really scrap aluminum then. Now what the execs are doing is to continue to "redefine" what a "regional" jet is, and specifically want to condition pilots to believe that a 76-100 seat airplane flying halfway across the U.S. is a "regional" jet. Of course that is a lie, but such is the ethics of business executives. It's an exercise in perception management and desensitization that some regional pilots are eager to buy. So in the end, mainlines are subsidizing their low-pay carriers, making them look profitable, and at the same time generating losses that make for an excuse to drive down mainline compensation towards low-pay carrier standards. It really is a brilliant strategy.
Last edited by Wheels up; 05-25-2009 at 02:14 PM.
#28
Banned
Joined APC: Feb 2009
Posts: 110
Nonsense. You can't dismiss Cape Air on the basis of the equipment they fly. This argument was never about that.
Southwest has succeeded as a stand-alone major airline. Cape Air has succeeded as a stand-alone regional airline. The conclusion is that either can succeed without the other.
Most of the majors have put themselves in a position to depend on the regionals, and vice-versa. And this co-dependency has driven a stake between the two. But to say there is no other way, well that it clearly far from reality.
Southwest has succeeded as a stand-alone major airline. Cape Air has succeeded as a stand-alone regional airline. The conclusion is that either can succeed without the other.
Most of the majors have put themselves in a position to depend on the regionals, and vice-versa. And this co-dependency has driven a stake between the two. But to say there is no other way, well that it clearly far from reality.
#29
The difference is majors can use regional carriers against one other to lower costs. The regionals do not have the leverage yet to do the same to the majors.
#30
Horizon actually does a bunch of stuff on their own. However, they do have about 30% of their flying purchased by Alaska, so they are partially subsidized. They also don't make very much a profit on their own, even in good years.
Last edited by Splanky; 05-25-2009 at 06:12 PM.
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