Guy Norris/LOS ANGELES
Intractable "scope clauses", increasing overcapacity, low returns and high development costs could soon hit the booming regional airline business, suppliers are warned.
Failure to ease constraints on operations by pilot scope clause agreements with US majors is seen as the biggest threat to growth, with American Eagle president Peter Bowler warning the Speednews regional and corporate suppliers conference that such clauses "represent major and intractable negotiation difficulties".
Scope clause agreements impose an "overwhelming prohibition on 'over 70 seats' for regional airlines", adds Walsh Aviation president John Walsh, arguing that such constraints have become tighter over the past three years and suggesting that upcoming renegotiations will be critical.
A United Airlines agreement expires next April, with the Delta Air Lines contract up in May and Northwest Airlines' in November. American Airlines' deal expires in August 2001, Continental's in November 2002 and that of US Airways, which plans a major expansion of its regional fleet, in January 2003.
At the 30- to 50-seat end of the market, Bowler cautions against capacity growth in excess of US gross domestic product (GDP) growth. He forecasts capacity growth of 5% for this year, versus estimated GDP growth of 3.8%. The gap may widen further next year, with capacity growing by 5.5% and GDP slowing to 2.6%.
Despite the warnings, the regional airline explosion continues, with "regional jets being the darlings of the industry", says Regional Airline Association (RAA) vice-president Deborah McElroy. About 370 regional jets are in service with US carriers, against 259 at the end of last year and 137 in 1997. Current orders and options could see the US regional jet fleet grow to 1,700 over the next five years, with 537 on firm order.
• RAA carriers saw revenue passenger kilometres (RPKs) rise by 23% in the second quarter, compared with the same period last year. AMR subsidiary American Eagle Airlines remains the USA's largest regional, with RPKs up by 13.3% for the first six months and passengers boarded up by 14.6%.
Source: Flight International
