Paul Lewis/WASHINGTON DC
The impact of the US economic slowdown on the country's major carriers has emerged as the prime concern of the US regional airline sector, which has ordered large numbers of new regional jets (RJs) on the back of record growth - much of it dependent on the expansion of mainline fleets, which are fed by regionals.
Delta Connection carrier Comair has already announced that it is indefinitely deferring all new RJ deliveries and cutting existing capacity, although in its case the move also comes in response to a financially damaging pilot strike.
The decision affects 45 ordered 40 to 50-seat Bombardier CRJ200s (17 of which were to have been delivered this year from May) and27 70-seat CRJ700s. Cincinnati-based Comair also wants to accelerate the trade-in of its nine Embraer EMB-120s and eight older CRJ100s.
Concern over airline first-quarter losses and the possible spread of industrial action has taken the shine off last year, another strong one for US regionals, with enplanements growing 8%.
"Carriers recognise that there has been a softening of the economy in some sectors and they're concerned about growth going forward," says Regional Airlines Association president Debbie McElroy.
Some 569 RJs were operating in the USA at the end of last year, with this figure set to quadruple by 2012, according to the Federal Aviation Administration. For many regional carriers the expansion is to be on a pro rata basis, determined by mainline fleet growth under scope clause agreements with pilot unions - so that if mainline growth slows, regional growth is also threatened.
United Airlines, for example, struck a new scope clause deal last year, but has since announced plans for the accelerated phase-out of its Boeing 727s to trim capacity - a move which could impact the rate at which it can add further RJs. Northwest Airlines is also accelerating the withdrawal of some McDonnell Douglas DC-10s.
Compounding scope clause concerns is a question mark over the regional sector's presumed ability to turn a profit even in harsh economic conditions. "Historically, the regionals have done better than the majors in times of economic downturn, because of leaner operating costs, a higher percentage of business traffic and downsizing routes to smaller regional aircraft," says McElroy. "But we now have a different mix of aircraft, higher airport costs and rising wages, and this is a concern."
Labour costs are a big worry, particularly if Comair's pilots secure a lucrative deal - sparking a round of bargaining at other regional carriers. Northwest's recent settlement with its mechanics, including a 24% pay rise, could also have knock-on effects.
The European Regions Airline Association says its members also enjoyed a strong 2000, with passenger numbers up 10% and average load factor at a record 58.2%.
With Europe's economies still generally riding high, its regionals may be less exposed to a downturn than their US equivalents. Most also have lower exposure to RJ orders and, for the most part, a greater degree of independence from the majors on behalf of which some of them operate. Scope clauses or their equivalents are in turn far less evident in Europe.
Source: Flight International
