The 50-seat regional jet was set to revolutionise the US airline industry when it made its debut 12 years ago. Faster, quieter and more comfortable than turboprops, the sleek new jets were deployed not only as replacement aircraft, but to open new markets for major airlines competing to increase market share.
But the glory days of the 50-seat regional jet appear to be over, at least to some observers. Whether as a result of fragile airline finances, lower fares or simple economics, the 50-seat market seems to have stalled after its rapid growth over the last several years.
Much of this is due to a changed operating environment, with the US airline industry yet to return to the profitability it enjoyed just five years ago. While passenger traffic has almost returned to peak levels, revenues remain more than 20% lower than in 2000, according to industry data.
Add to this the proliferation of low-cost carriers, which have put downward pressure on yields as they have snatched market share away from legacy carriers and their regional partners. As a result, both majors and regionals have been forced to scrutinise costs as never before.
This has proved detrimental to the 50-seat jet, now one of the workhorses of the US regional fleet. "It's a high-cost aircraft," says one analyst. "This is an aircraft that needs high fares to work, and obviously fares have tumbled."
Scope effect
Perhaps no issue has affected the 50-seat market as much as the scope clause. In better times, pilot unions at the US majors strictly limited flying by regional partners to 50-seaters and below. But as financial circumstances worsened, unions relented on scope enough to allow several regionals to begin flying 70-seat jets.
More than any other reason, the spectre of bankruptcy drove the unions to relax scope restrictions, says Regional Airline Association president Debbie McElroy. "You saw relaxation at US Airways – bankruptcy; United – bankruptcy; Delta – threat of bankruptcy. So it wasn't as if everyone said we need to do this [voluntarily]."
The trend toward larger regional jets shows no sign of slowing, says Samantha Panella, an airline analyst for Raymond James. "In terms of growth with the 50-seaters, it has reached saturation point," she says. "Prior to 9/11, most of the legacy airlines weren't able to have aircraft with more than 50 seats. Now that they have them, they want to use them to maximum revenue."
While smaller regional jets are still in regular use, and often sought after by unserved communities, they still have the highest per-seat cost compared to turboprops, larger regional jets and mainline aircraft. In today's low-fares environment it is increasingly hard to make a profit with the smaller regional jet, says Jason Riesinger, director of international and express planning for US Airways.
There are concerns about the impact on the aftermarket of a move away from 50-seat flying. "What if we lose a major carrier? What if there's a merger? This has the potential to put a lot of these aircraft on the market," says one industry observer. "You've got Independence Air on the rocks. United has thrown Air Wisconsin out. US Airways doesn't want any more 50-seaters, they made that clear. This will result in a surplus of 50-seaters," says another analyst.
But airlines such as Northwest are seeking them out, exercising options last month for 15 Bombardier CRJ200s for regional affiliate Mesaba. And Mesa Air has struck a deal to operate up to 30 of its CRJ200s for Delta, providing a home for aircraft likely to be displaced by US Airways' move to larger regional jets. So far, used 50-seaters have been scarce in the aftermarket, which tends to absorb them quickly.
Meanwhile, the market for 30-seat regional jets has all but disappeared due to unjustifiably high seat costs, observers say, but there is still demand for 30-seat turboprops. In very-short-haul markets, the turboprop still makes the best economic sense because of its lower trip costs, say analysts.
Even so, most are looking to the other end of the regional-jet spectrum when it comes to near-term growth prospects. "The 50-seat market, even the turboprop market, still exists," says Raymond James' Panella. "But future growth opportunities belong to larger aircraft."
Source: Flight International
