Regional aircraft have long been a key part of the aviation mix – providing vital connectivity to sometimes far-flung communities. But the market has in recent years faced significant turbulence. Historically dominated by smaller jets and turboprops, the sector is under pressure on multiple fronts. The rise of low-cost carriers (LCCs), their increased use of narrowbody aircraft on traditionally regional routes, and an ongoing pilot shortage are reshaping the competitive landscape.
LCCs have dramatically disrupted the entire airline industry. With affordable fares and operating standardised fleets of predominantly narrowbody aircraft, the business model has captured significant market share. But as well as taking customers from legacy carriers, LCCs are also deploying larger narrowbodies on some routes once served by smaller jets. This is to meet passenger demand and lower costs on some routes, but as regional operators get squeezed out of the market other smaller communities lose out on valuable connectivity and accessibility.
MULTIPLE CHALLENGES
Regulatory hurdles, infrastructure limitations, and supply chain disruptions further complicate the picture. Pilot shortages are particularly problematic, as staff leave regional carriers for more lucrative narrowbody contracts.
But longer term there is hope. We believe more independent regional carriers will return to their traditional markets in North America and Europe as they tap into passenger demand for flights from their local airport.
And despite challenges, emerging markets also present growing opportunities for regional aircraft. Developing regions often lack the passenger volumes for narrowbody operations, making smaller jets and turboprops ideal for opening new routes. Demand for connectivity could drive a resurgence in regional aircraft sales as airlines expand beyond major hubs.
Continued urbanisation and economic growth are driving increased travel demand in Africa, Central Asia and Australia. As these markets thrive, the need for cost-effective regional aircraft will likely increase.
Crossover aircraft like the Airbus A220 and larger members of the Embraer E2 series are blurring lines between regional and narrowbody aircraft. For carriers, these jets present an opportunity to expand reach with a compelling alternative. With lower operating costs and greater passenger comfort, crossover jets are increasingly attractive for those looking to smaller aircraft.
The planned 2028 restart of Dash 8 production by De Havilland Canada also signals a potential market revival. Turboprops, ideal for short-haul routes and airports with shorter runways, remain in demand, with steady orders for manufacturers, principally ATR. Embraer too has seen consistent sales of its E175, especially in the USA, where a combination of scope clause-driven market distortion and the demand for regional feed is fuelling orders.
Public Service Obligation (PSO) routes, providing a subsidised but guaranteed level of air service for small and rural communities, were a keystone of air travel in the late 1990s. PSOs may have declined in recent years but there is growing pressure to bring these commitments back. The potential for growth in emerging markets, coupled with new production initiatives, gives hope.
As does the likelihood of a possible recession.
While the R word may fill many with dread, a recession is not always a bad thing. For aviation, it would mean a stabilisation of the supply chain and an easing of labour shortages. An economic slowdown would also lead to right-sizing, with airlines turning to lower capacity aircraft without the higher price tag and costs of larger narrowbodies.
In such conditions, some pilots would return to regional airlines, or new regional carriers could be created as passengers choose to holiday closer to home. There will always be a need for versatile, cost-effective regional aircraft.
Raphael Haddad is president of US-headquartered aircraft broker Jetcraft Commercial
