I’m still out on leave, but I’ll be back soon. Enjoy this post about small communities . . .

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Over 70% of US airports with commercial air service are served exclusively by regional airlines. And almost all of those airports reside in or next to small or midsize communities. Unfortunately, both the communities and regional airlines face head winds in the coming years. New regulations coupled with the potential for additional taxes and reductions in subsidies will hamper the regionals’ ability to grow and operate with sustained profitability. This will have a direct effect on the small communities that regional airlines serve.

Most people have never heard of Pinnacle Airlines, ExpressJet Airlines, or Republic Airlines but have flown on them many times. An average regional airline flies turboprop aircraft or jet aircraft with less than 100 seats on a contract basis for mainline carriers such as United or Delta. Although separate companies, the regionals usually fly under the mainline’s brand such as Delta Connection or United Express. In most cases, Delta and United take care of scheduling, promoting, and selling tickets for the flights while the regional takes care of providing the primary product. Now, let’s hop into some of the issues.

One of the bigger impacts to the industry will be felt when new rules regulating pilot duty time kick in. (Cranky did a good job of breaking down this issue in a previous post.) These new rules were introduced to address ongoing concerns about pilot fatigue. Pilots will now work a little less and get more rest. This makes sense. Who doesn’t want a well-rested pilot at the controls?

But there is a flip side. The new rules governing duty and rest periods will force carriers to hire more pilots if they want to run the same schedules they have today. The savvy regionals will work diligently with their mainline partners to reoptimize schedules. But they will not be able to totally avoid higher pilot costs. Regionals will have to pass on the additional costs to their mainline customers to remain at current profitability levels.

Another new upcoming regulation will increase the minimum number of hours of experience a pilot needs to fly for an airline. Currently, a pilot only needs 250 hours along with a Commercial License to get hired with a regional airline. In a couple of years, this will increase to 1,500 hours and require an Airline Transport Pilot (ATP) certificate.

On the surface, this seems like a no brainer. More hours = more experience = safer flying. But there isn’t research proving that pilots with 1,500 hours consistently fly safer than someone with less experience. When this steep increase is implemented, it will create an artificial pilot shortage. Some pilots pay out of pocket or through loans to get to 250 hours. Getting to 1,500 hours on one’s own dime will push a bunch of would-be pilots out of the market. The shortage will push up wages to account for the lower supply and result in additional expenses.

In the fall of 2011, the Obama administration proposed creating a new $100 departure tax for all air carrier departures and general aviation jet departures. The proposal also increased security taxes on airline tickets and was given to the super committee for consideration. An impressive coalition of 30 organizations including airline trade groups, general aviation groups, unions, and manufacturers quickly got together to fight the proposal. The rally cry is that airlines and passengers already pay higher taxes than alcohol, tobacco and guns which are intentionally set high to discourage their use.

It appears that the White House quietly backed off the proposal because of the backlash it received during an election cycle. If the proposal was revisited and passed, it would have a disproportionate effect on regional airlines that carry fewer passengers each flight than their mainline counterparts. It’s much cheaper to spread $100 over 200 passengers than over 50.

Another debate in Congress has been the over subsidizing air service to small communities through the Essential Air Service (EAS) program. This program is designed to help provide small communities with air service that cannot, due to such low demand, support itself. I expect a haircut or possibly elimination of this program. Accordingly, many routes would cease to exist.

In isolation, each of these challenges would have a much smaller impact on the industry. Together, these policies would have significant negative economic effects and force airlines to cut flights on underperforming routes. And each flight lost in a small community has larger implications due to the community’s relative size.

These changes will burden an industry already struggling with consolidation and high fuel prices. Pinnacle is flirting with bankruptcy. SkyWest and Republic’s financials have been limping along since their acquisitions of ExpressJet and Frontier respectively. American Eagle’s anticipated spinoff from American Airlines will increase competition in an already saturated market. We’re seeing a steep decline in small jets which don’t work with today’s fuel prices. Turning a good profit in the regional industry is proving difficult even while their mainline counterparts are starting to enjoy being in the black.

Some municipalities and the airlines will come up with creative solutions to mitigate the effects. They will also need to continue lobbying the government to implement policies that have positive economic effects. Regardless, it appears that the end result will be fewer options in small communities.

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Matt Tregre is an airline enthusiast and has held positions in finance, revenue management, pricing, customer service, and baggage tossing with stints at Southwest, ExpressJet, & Pinnacle. During school, he developed marketing plans for small airports. He now works in revenue strategies for a corporate aviation company and greatly misses having flight benefits.

[Original photo via Wikimedia Commons user Paranomia/CC 3.0]

Bad news for fans of transparency. According to PlaneBusiness, Both Comair and Pinnacle, regionals operating primarily for Delta, will stop reporting their on time performance information to the Department of Transportation (DOT). That sucks, but it’s somewhat understandable considering the circumstances. Let me explain.

First of all, let’s start with the rules. The DOT requires that airlines report their operational stats for public consumption if they have more than 1 percent of total domestic scheduled service revenue. Lame, right? I mean, every airline should be required to report. I’m all for transparency. But that’s a different story. Why are these two pulling out?

Well, Comair has been the incredible shrinking airline lately, and it’s now less than 1 percent of revenues so it no longer has to report. Pinnacle, meanwhile, has never been big enough to be required to report, but it did it out of the kindness of its heart. Now it’s decided to change course. Bummer.

But what would prompt this? My guess is that it’s related to the way the DOT makes airlines report, and Pinnacle and Comair don’t like it. I know we’ve talked about this before, but let’s talk about it again. On time performance and other operational stats are reported by operating airline. So if you bought a ticket on Delta to fly from LA to Atlanta, it will show up as Delta. But if you bought a ticket on Delta to fly from Atlanta to Greensboro, it’ll show up under Comair’s stats and not Delta’s.

Now tell me this, do you care what Comair’s on time performance is? No. You bought a ticket on Delta, so you care what Delta’s stats look like, and that should include all of its regional partners. After all, it says Delta (Connection) on the side of the airplane.

But why would that make Comair and Pinnacle stop reporting? It’s because they are, as regionals, doomed to be near the bottom in general. When the weather goes bad, airport capacity goes down. The mainline airline (let’s stick with Delta since we’ve been using it so far), has to make decisions about what flights can go and when. The goal is to displace as few passengers as possible in those situations, and that usually means the regionals take the brunt of the delays and cancellations because they fly smaller planes.

Let’s look at the November Air Travel Consumer Report, while we’re at it. It doesn’t help to look at the overall numbers, but it does help to look at airport-specific ones because that’s where the weather issues really pop out. And what better airport to look at than JFK, the king of weather problems?

Now, the most recent report was for travel in September and the weather was mostly good this month, but you can still see this effect:

It’s possible that Pinnacle and Comair are just running worse operations than Delta, but even if they’re running the best operations around, they’re still at the whim of Delta when flights need to be impacted. So why deal with that when you can just not report? Apparently that’s what Comair and Pinnacle have decided to do. That leaves ExpressJet as the only reporting airline that isn’t actually required to report, but since it’s going to be merged into Atlantic Southeast, that’s a moot point anyway.

I really wish the feds would require all airlines to report. This arbitrary threshold of 1 percent of scheduled service revenue is just goofy.

November Airline Traffic Numbers
Traffic numbers for November are in, and man is it ugly.

Pinnacle Improves Delta Connection On Time Performance
It wasn’t long ago that Delta was looking to ditch Pinnacle as a regional carrier due to poor performance. It’s a completely different story these days.

Delta Northwest Merger Enables Matching Capacity to the Right Aircraft
The merger has allowed Delta to finally start flying a large fleet of smaller long haul aircraft. LAX-Tampa is the first route to see the change with more to come.

Zero Star Hotel Opens Near Zurich
The world’s first zero star hotel has opened in an abandoned nuclear bunker in Switzerland. Oh yeah, you know you want to stay here.

Lufthansa Joins Social Network Xiaonei, “Facebook of China”
A couple months ago we talked about Lufthansa’s misguided efforts to build their own social network. Now they’re changing their tune.

Virgin America’s Main Cabin Select Capitalizes on Corporate Contracts
When Virgin America launched Main Cabin Select, its premium coach product, I thought that price was too high. According to the airline, that’s not the case.

Branson Airport Gets Its First Tenant: AirTran
AirTran announced it would be the first tenant at Branson’s new airport which opens next year. This is only a slight surprise to me, but it’s a good move for both.

Bombardier Kicks Off Farnborough by Launching the C-Series
Bombardier has talked about it for years, and now it’s official. The 110 to 130 seat C-Series has launched, and it’s promising massive fuel savings.

ExpressJet Ending Branded Service with Full Planes
ExpressJet may have announced the end of branded service, but those flights are flying full this summer, showing this may work one day with lower fuel costs.

Is US Airways “Intimidating” Its Pilots?
US Airways wants to use less fuel, so the airline is training its pilots to do just that. Is this stepping over the line?

Farnborough Order Counts
Farnborough Air Show is more than halfway through. That means it’s a good time to step back and see where the aircraft orders are coming from.

Delta To Keep Pinnacle Flying
Delaying entry into service of a handful of planes may have convinced Delta not to drop Pinnacle’s contract, but the reliability question still hangs in the air.

After yesterday’s splash, I was hoping there would be a big follow-up to Delta’s Week of Fun today. So far, that isn’t the case.

The big news today? Movies and cocktails!

Ah yes, now you can watch HBO on those flights over 1,750 miles that have TV installed. That’ll be $5 a movie and $2 a show if you’re interested. Also today there will be four cocktails released under the “Midnight Sky” line. Again, that’s $5 a cocktail in coach but you get one free on intercontinental flights. It’s free up front, of course.

Other than that? Well, they updated the logo on Delta.com so that’s good. And they signed Pinnacle Airlines as a new regional partner airline. For those keeping score, that puts Delta at nine connection carriers. (Atlantic Southeast, Big Sky, Chautauqua, Comair, ExpressJet, Freedom, Shuttle America, SkyWest, and now Pinnacle.) That means Delta’s in a dead-heat with US Airways for the most regional partners. US Airways also has nine. (Air Midwest, Air Wisconsin, Chautauqua, Colgan, Mesa, MidAtlantic, Piedmont, PSA, Republic, TransStates.) Introducing a brand is one thing, but keeping it consistent across 10 airlines (Delta + 9 connections partners) is a much different issue.

I’m keeping my fingers crossed that tomorrow’s news is much more exciting.