There is no doubt the airline industry is changing again.  With legacies merging to become SuperLegacies and owners of very diversified fleets, there is more and more pressure on regional airlines.  In addition, the bankruptcies of the 2000’s have led to airlines with lower cost structures and revised contracts that allow more “regional” flying of mainline routes.  That would imply more regional airline flying but the “regionals” flying those aircraft under those scope clauses are, for the most part, owned by the legacy airlines. 

Republic airlines has been attempting ot diversify itself by buying Frontier and Midwest.  Mesa airlines is just holding on by a thread.  ExpressJet tried branded flying and corporate flying without much luck.  So, where does it from here?

I think cost is going to be the driver in the future.  Regional jets became prolific for one reason in the 1990’s:  cheap oil.  That’s gone and it is unlikely that we’ll ever see it again.  Three regional airlines adopted a newer model of flying modern turboprop aircraft and I think it is interesting that those three also happen to be pretty profitable and reliable operations.  Horizon (wholly owned by Alaska Airlines), Frontier’s Lynx and Pinnacle (Colgan) on behalf of Continental all adopted the Q400 turboprop and made it work very nicely. 

Yes, Lynx is going away since Republic couldn’t justify a small subfleet when it had other aircraft that were more expensive and which would sit idle if not used on behalf of Frontier.  However, even Southwest Airlines was very intrigued by what they saw of Lynx last year when they decided to bid for Frontier.  Horizon continues to be profitable and flies this aircraft on some pretty long routes and remains competitive with regional jets and even some mailine aircraft.  Pinnacle (Colgan) has done very well for Continental out of the NYC area and will soon be expanding its turboprops into Houston for Continental.

The turboprop is much cheaper to operate.   A 30% to 40% load factor can result in a break even flight whereas some airlines effectively lose money on similar routes using small regional jets. 

They are cheaper to buy.  A Q400 costs less to purchase than an E170/190, has almost as many seats and is just as comfortable for 90%+ of all routes.  They’re also a little bit cheaper to maintain.

The modern turboprop can fly block times on routes of 500nm or less that are competitive with any jet.  Oh, there might be 5 minutes difference in the block times between a Q400 and an E170 or B737 but it’s a competive block time.  Why?  The turboprops reach crusing altitude faster, can take off from more runways and can land quicker (reduced time to go from cruising to landing altitudes.) 

I think we’ll see independent regional airlines explore more turboprop flying for the legacy airlines in the future.  It is a niche that fits them well and, yes, goes back to basics.  The regionals which are flying mainline routes with semi-regional jet equipment are going to be subsidiary companies of legacies in the future.  The legacy airlines can use them to onboard new pilots and use them as places to keep pilots hired when furloughs are necessary from mainline flying.  Unions like that and, as a result, are likely to embrace allowing more “scope” for flying the 70 to 100 seat aircraft on more mainline routes in the future.

Filed under: Airline Fleets by ajax