US regional airlines and aircraft manufacturers see significant opportunity to expand on short-haul regional routes that suffered cuts following airline consolidation.
But to capture that opportunity, airlines must have the right aircraft – and enough pilots to fly them, executives say.
"As… the airlines have grown the aircraft size and grown their average stage length, there is a lot of market share being left behind," says John Sullivan, part owner and executive chairman of US regional carrier CommutAir.
"Usually, when that happens… there is some backfilling," Sullivan adds. "Manufacturers come up and introduce a new aircraft to address the market share that has been vacated. Maybe that is going to happen again."
Silver Airways sees "major opportunity" on short-haul routes that have "gone away" since the terrorist attacks of 2001, says Silver president and chief financial officer Jason Bewley.
Silver ordered 20 new ATR 42-600s earlier this year, and has hinted it may deploy those aircraft on such routes.
"We want to get back the customers we have lost in the last ten years," ATR vice-president of sales in the Americas Pier-Luigi Baldacchini tells FlightGlobal, adding that hundreds of US regional routes lost air service in recent years.
"There is a gap that is happening, and we are here to fill this," adds ATR head of market strategy Bertrand Pabon.
The executives spoke at the Regional Airline Association (RAA) annual event in West Palm Beach last week.
CLEAR TREND
The string of airline mergers in recent years left the US industry controlled by four massive carriers and several low-cost and ultra-low-cost competitors.
Though many discounters have expanded, network carriers trimmed service in the last decade – cuts that particularly affected regional airlines and short routes.
Between 2007 and 2016, the number of regional departures slipped 26% to 3.8 million, according to data cited by the RAA.
ATR's Baldacchini says cuts left US travellers hitting the road, driving 5-6h to reach cities that once had direct regional flights.
Meanwhile, US regionals shifted away from turboprops and small regional jets.
The US regional fleet currently includes 207 turboprops, down from 554 in mid-2006, and 666 regional jets with 50 seats or fewer – exactly half as many as 11 years ago, according to Flight Fleets Analyzer.
At the same time, US carriers doubled their fleet of large regional jets (those with 70 to 100 seats, like Embraer E-Jets and CRJ700/900s) to 1,067 aircraft, Fleets Analyzer shows.
Only several US carriers still operate turboprops, and two companies – CommutAir and Piedmont Airlines – recently announced plans to retire 37-seat Bombardier Dash 8-100s and 50-seat Dash 8-300s.
Both carriers intend to replace those aircraft with 50-seat Embraer 145s, which are also ageing, at 11-20 years old, according to Fleets Analyzer.
Asked about CommutAir's next fleet move, Sullivan mentions larger jets, not turboprops.
"We have our eye on graduating from the 145s to, possibly… a slightly larger jet," he says. Such decisions rest partly with partner United Airlines, which co-owns CommutAir and holds leases on the E145s, Sullivan notes.
ATR's Baldacchini says CommutAir and Piedmont have found only "a temporary solution" by replacing turboprops with ERJs.
Turboprops are more efficient than 50-seat jets on many short-haul routes, he says, and larger CRJs and E-Jets are not ideal replacements.
"The 145s, in the long run, cannot be replaced by the 70-seater," says Baldacchini.
For those reasons, Baldacchini sees demand in the medium- to long-term timeframe for up to 200 new turboprops in North America.
Chip Childs, chief executive of SkyWest Inc, says turboprops, particularly new models, could eventually be ideal replacements for small jets.
But he says 50-seat jets will remain in fleets for years, assuming airlines can overcome the ongoing pilot shortage.
"As much as we love new aircraft… we still love 50-seat aircraft," Childs says. "We can clearly fly them for many, many years to come."
ATR'S BROAD VISION
Baldacchini views ATR as having potential to help carriers fill service gaps and revive an independent regional airline industry in the USA. By "independent", he means carriers that sell their own tickets and set their own schedules.
ATR's newest US customer Silver Airways is just that type of airline, he says.
Based in Fort Lauderdale, Silver sets its own schedule and sells its own tickets. Silver does have codeshare agreements with other carriers, but, unlike nearly all other regional airlines, does not fly under capacity purchase agreements with major airlines.
On 1 August, Silver announced it ordered 20 46-seat ATR 42-600s to replace Saab 340Bs. Silver has options for up to 50 ATRs and can convert to the larger 72-600.
Silver chief executive Steven Rossum says his company is now eyeing under-served short-haul markets north of Silver's network, which connects cities in Florida and the Bahamas.
Silver CFO Bewley sees opportunities on routes like those formerly served by recently-defunct Glo Airlines. Glo operated turboprops from New Orleans to cities like Memphis, Birmingham, Little Rock, Huntsville and Shreveport.
Such routes have notable demand, and were once served by carriers like Southwest Airlines and ExpressJet, Bewley says.
New ATRs also "may appeal" to Cape Air, another independent regional airline based in Barnstable, Massachusetts, says ATR's Baldacchini.
Cape Air declines to comment for this story, saying it is focused on restoring operations in the Caribbean following recent hurricanes.
COMPETING TURBOPROPS
Bombardier sees opportunity for turboprop sales as well, but predicts most demand will be for larger turboprops, according to recent market overviews released by the company.
It predicts worldwide carriers will retire some 2,200 small regional aircraft (including turboprops and small jets) by 2036. Carriers will replace most of those aircraft with larger types, Bombardier says.
Those predictions led Bombardier in recent years to develop Q400s with up to 90 seats. It has sold high-capacity versions to carriers in Africa, Asia and India.
Competition may also come from Embraer.
In recent months, John Slattery, chief executive of Embraer's commercial unit, has talked about – though not committed – to a new turboprop, noting that existing models use older technology. Embraer held meetings with airline executives in Europe last month to discuss a new turboprop, according to Slattery.
Engine maker Pratt & Whitney Canada sees opportunity for a new turboprop, saying new engines can deliver 20% improved fuel burn.
"We believe that there is going to be a room, eventually, for a 90-passenger turboprop," P&W Canada vice-president Frederic Lefebvre says at the RAA event. "We believe there is about 250 regional jets [that] are operated not-efficiently in some markets, especially short routes."
Source: Cirium Dashboard
