Consider this market landscape that we should see, in fact, by the end of this year:

• Delta Airlines
• United Airlines
• American/US Airways
• Southwest Airlines

Those 4 airlines will carry about 85 to 90% of airline traffic in the domestic United States airline market.  Of the 4, 3 of those airlines will use regional airlines for “feed” to their hubs.  The bulk of those regional airlines will still be using many 50 seat regional jets (CRJ200/ERJ-145 aircraft) for those regional jet routes.

The original regional jets were built and meant for routes that were spokes to a hub from a region.  For instance, those regional jets might serve cities such as Waco, Abilene and even Midland/Odessa from DFW airport.  They still do today.

For those short, simple flights, there cannot be much quarrel with the airliner being used.  (Well, there can but that’s a blog post for another day.)

But regional jets get used for routes that go far beyond a “region”.  I remember that when I flew Continental from Dallas to Milwaukee, I had to take an ERJ-145 from DFW to Cleveland and then another from Cleveland to Milwaukee.  It was a total trip time of 5+ hours in the air and that’s a bit much in those airliners.

Many believe that the new 70 to 100 seat regional jets are taking over such routes.  Here and there, that’s true.  There are presently 50 seat (or less) regional jets also flying routes such as OKC to EWR (Oklahoma City to Newark, NJ and 1325nm long) or Milwaukee to DFW (853nm) or Portland, OR to Ontario (Los Angeles), CA (838nm).  Try Cleveland to Miami at nearly 1100nm.

It’s the Long and Thin syndrome.  We can fill 40 seats a day on this aircraft and fly it for over 3 and sometimes 4 hours and earn money by feeding people into a hub that is as much as halfway across the country.

But just because we can, doesn’t mean we should.  Those routes add incremental revenue but they are rarely stand-alone profitable for an airline.  In fact, the one airline who is getting away from that mentality is Delta.  A route gets evaluated for its ability to stand on its own two feet at that airline, more often than not.

Will there still be regional jets?  Yes.  Will there still be 50 seat jets?  Yes.  For the foreseeable future the 50 seat regional jet will be used.  It will be used less and less and you won’t find another newer, more efficient 50 seat jet showing up to replace it either.  Airlines will continue to use them if for no other reason than the fact that capital costs of a 50 seat jet will approach unheard of low levels as time goes by.  If you can acquire a used 50 seat jet cheap enough, you can still make money.

And those aircraft are getting cheaper every month.

I think we’ll see them around for another 7 to 10 years but then I think we’ll see them replaced more and more with either larger mainline style regional jets or smaller turbo-prop regional aircraft.

There won’t be any such thing as a replacement for those first generation aircraft.

Filed under: Airline Fleets by ajax