The Rise of the 50 Seat Regional Jet

I realize the title of this post probably has a lot of you scratching your heads. The 50 seat regional jet is dead, right? Delta and United are shedding them as quickly as possible in favor of larger 66-76 seat jets, and nobody seems to want the little ones. That, however, doesn’t mean the airplane is dead. It means that there is probably some opportunity looming.

We all probably know the story by now. Those 50 seat jets are more expensive to operate on a per seat basis, even though they operate in a single class configuration while the larger ones have First and Premium Economy making them less dense. For that reason, airlines all over have decided to park them.

Delta is dropping a couple hundred over the next few years from its regional fleet and United is set up to do the same. Clearly, nobody wants these airplanes. But when it comes to costs, it’s important to remember that there are two pieces to the equation. There are operating costs, which only vary if things like fuel prices vary, and then there are ownership costs. The latter is where the opportunity will present itself.

First, let’s talk about operating costs. These numbers can certainly vary. Everyone has different maintenance costs, and fuel prices go up and down all the time. They also schedule the airplanes differently and that can impact crew costs. But let’s try and normalize things using some standard data. It won’t be perfectly right for every airline, but it will at least be good for comparison purposes across airplanes.

Regional Operating Costs

I took some crew, fuel, maintenance, and landing fee costs from the manufacturer and divided them over the now-standard(ish) number of seats on each airplane. Everyone puts 37 seats on a Q200 and 50 seats on a CRJ-200. But for the other airplanes, I went with United’s and Delta’s seat counts since that seems to be becoming the industry norm. Naturally, if you’re an airline like US Airways where you put 79 seats on a CRJ-900, your per seat cost will come down.

It’s important to note that I’m using a 300 nautical mile trip to get these numbers. While 50-seaters have flown longer flights over the years, it’s increasingly rare to see them on long flights these days. The larger regionals with their First and Premium Economy cabins are much better suited to those flights. So if we stick with flights of roughly an hour, that should be the sweet spot for comparison purposes. If 50-seaters are going to make a comeback, that’s the kind of trip I’d expect because it either frees up larger regional to do longer flights or it replaces turboprops on the short flights.

As you can see, it’s no surprise that the small airplanes have lower total trip costs. But with fewer seats, they have higher costs per seat. And that’s why airlines have moved toward larger airplanes. A couple dollars per seat might not sound like a lot, but that 5 percent difference between a CRJ-200 and CRJ-700 can be the difference between profit and loss. And the 12 percent difference between a CRJ-200 and CRJ-900 is downright huge. This isn’t a high margin business, so even little differences matter. (And keep in mind that besides reducing costs per seat, the CRJ-700/900 can also generate more revenue with First Class and Premium Economy sections.)

Of course, you can see it’s the Q400 prop that really stands out here as being cheap to operate on a per seat basis. But on longer routes, the Q400 is going to be significantly slower than a jet. Even on a 478nm route like San Francisco to Portland, Alaska schedules its jets for flights of about 1h40m while the Q400s are scheduled at over 2 hours. On even longer routes where CRJ-700/900s operate today, the Q400 is just too slow. With a jet, you can get a lot more flying in a single day, and that matters a lot for ownership costs.

Really, it’s ownership costs here that are bound to make a big difference. A Q400 costs more than a CRJ-200. That might work out just fine if you have a route that can fill 70 seats on each flight, but on many of these routes, the demand simply isn’t there. On the flip side, you have the Q200 which is a smaller airplane. US Airways flies a bunch of Dash 8-100s and -200s (which are the earlier versions of the Q200) around its system. The costs per seat are higher, but the ownership costs have to be very low. But there’s a problem. These airplanes are hitting the end of their lives and there just aren’t new ones to be had. Bombardier only makes Q400 props these days and has no plans to restart production of smaller airplanes.

Where does that leave the airlines? Well, Delta and United clearly decided that the CRJ-200s were just too expensive. Some cities will be happy because they’ll get larger airplanes with First Class. But smaller cities aren’t going to be as lucky. It might very well mean that network carrier service just disappears.

With Delta and United shedding their fleets, however, that means there’s a huge glut of 50-seat jets on the market. And nobody wants them. When supply goes up and demand goes down, only one thing can happen – prices collapse. Now, it would seem to me that when ownership costs collapse, the opportunity to find a way to successfully use those 50-seaters re-emerges.

I don’t say that with glee. After all, the experience flying in those cramped tubes is not exactly pleasant. But as the smaller turboprops hit the end of their lives, those 50-seat jets are the next best option out there until somebody (anybody, please?) comes up with something better. But that won’t happen soon.

So, depending upon what oil does (huge spikes would be a problem), it wouldn’t surprise me if we see 50-seaters make a comeback. In the US, the leaves the combined US Airways/American as the only real potential growth target, but there are already a ton in the American fleet. It will be interesting to see how the US Airways influence begins to craft the new network and fleet plan. But other than that, the real opportunity may be elsewhere in the world. No matter what, it’s likely going to be hard to call this airplane dead. As ownership costs sink, opportunity knocks.

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