When Delta first announced plans to completely remake its regional fleet, I figured it would take a fair amount of time for it to happen. After all, the airline needed to get rid of more than 200 airplanes while adding about 150 more. Boy, was I wrong. It’s just about done.

I put together a graphic showing what’s happening. This compares where we were at the end of the first quarter 2012 versus where we will be when it’s all done in the next couple years.

Remember, while the plan is in place, this isn’t actually happening overnight. It will take a couple years. Still, the plan is now set, so let’s talk about it.

The 50-Seaters
As you can see, the 50-seat category is the one taking the biggest beating. Comair was shut down so its 30 CRJ-200s are being retired. Pinnacle is in bankruptcy, and Delta has decided that all 140 of the CRJ-200s that it’s operating will go away as well. Meanwhile, SkyWest (including subsidiary ExpressJet) has agreed to cut 66 of its CRJ-200s out.

That leaves 90 of the airplanes with SkyWest. Republic-owned Chautauqua, meanwhile, was at 24 ERJ-145s but has agreed to operate 7 more at least for the next year. So at most, there are a mere 121 50-seaters under contract. That’s incredible, and it’s lower than the 125 that Delta had as its hard ceiling.

The 70-Seaters
The number of 70-seat aircraft in the Delta Connection fleet hasn’t changed but the operators have. When Comair was shut down, 5 of its CRJ-700s were given to SkyWest while 10 were given to GoJet. Meanwhile, GoJet had finished picking up 6 more from SkyWest to get to its steady 22 airplanes along with 6 at sister-airline Compass. That left SkyWest with 60 of the airplanes. Republic-owned Shuttle America rounds out the fleet with 14 EMB-170s. That’s a total of 102.

The 76-Seaters
In the 76-seat range, there are growth plans, but there is also some shifting. Comair’s 13 airplanes plus 16 from Pinnacle were given to SkyWest, most likely to give SkyWest incentive to go ahead and ditch those 66 50-seaters. Meanwhile, Shuttle America stayed steady with 16 EMB-175s while Compass had 36.

Pinnacle saw the greatest change. After losing 16 airplanes to SkyWest, Pinnacle had 41 CRJ-900s in its fleet. Delta has now decided to give an additional 40 CRJ-900s to Pinnacle as part of its growth plan. Pinnacle will now solely be a CRJ-900 operator with 81 total.

That leaves Delta with 193 airplanes in this category, but it has the right to go up to 223 after it adds its last 717 to the mainline fleet. So who will get the last 30? Well, along with that order for 40 CRJ-900s, Delta secured 30 options. I assume that at some point those will be exercised and assigned to one of the remaining four regionals – SkyWest/ExpressJet, Shuttle America, Pinnacle, or GoJet/Compass.

The 110-Seaters
Lastly, we have the new 110-seat category. It was Delta’s deal to buy 88 of these airplanes from Southwest that triggered all these other shifts. Those will start coming in next year and deliveries will take a couple of years. Delta had no airplanes in this category before, but now it will operate 88.

What Does This Mean?
When this is all said and done, things will look much better for travelers. The 50-seaters are small and cramped, and lack amenities that even the slightly bigger aircraft will have. For example, the 50-seaters are all coach. The 70+ seat aircraft will have coach, Economy Comfort (more legroom), and First Class. Oh, and they’ll all have wifi too.

That doesn’t mean there isn’t a place for the 50-seaters. Some communities and routes are going to need airplanes that size, but it’s not nearly as many as airlines originally thought. Most airlines would rather go bigger, and Delta has done that by ordering more CRJ-900s for its regionals.

Now I’ll admit that from a passenger perspective, I was bummed to see Delta grow with CRJ-900s. The Embraer 175s have wider and more comfortable cabins. But I have no doubt that Delta got a screaming deal on those airplanes and money talks.

Personally, I’m most excited about the addition of the 717s. That’s partially because they were built in my backyard here in Long Beach, but I actually do like flying on those airplanes. I certainly like them a LOT more than regional jets.

What’s really interesting is that this change isn’t just impacting Delta. United’s pilots agreed to a very similar deal which will see United remake its fleet as well. And while American is a bit in flux still, it’s expected that we’ll see a similar type of deal no matter whether there’s a merger or not.

The downside is, of course, that with fewer small airplanes, small cities will take a hit. If they’re lucky, they’ll have fewer flights but on bigger airplanes. If they aren’t, they’ll lose a lot of service. We’ll have to see how this all shakes out.

But overall, this is a good thing for travelers. And the speed with which is all shook out is pretty amazing.

I’m hanging out with the Humuhumunukunukuapua’a this week, but fear not. I have posts scheduled to go live. Today, we talk American Eagle.
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The casual traveler might not realize this, but American’s regional operation is far different from those of the other big US airlines for a few reasons. All of those reasons, however, are about to be blown up and American Eagle will look a lot like Delta Connection, United Express, or US Airways Express. American’s announcement that it would make American Eagle a brand name and bring on SkyWest as its first non-owned operator is just the beginning of many changes to come.

Today, wholly-owned American Eagle and its subsidiary Executive Airlines are the only airlines that fly as American Eagle. With more than 200 airplanes, that is nearly all of American’s regional operation. The only other airline that flies in American’s regional operation today is Chautauqua, an airline that flies 15 ERJ-145s but NOT as American Eagle. Those operate as AmericanConnection for now.

American Eagle will now become a brand instead of an actual airline. In other words, any regional airline will be able to fly as American Eagle from now on. Chautauqua’s AmericanConnection operation will now fly under the American Eagle banner and the AmericanConnection brand will disappear. But the big news is that there’s a new partner in town… SkyWest.

SkyWest signed a deal to fly 23 CRJ-200s (12 by SkyWest and 11 by subsidiary ExpressJet) for American. I believe the 12 SkyWest airplanes will all go to LA. American Eagle’s current flying at LAX will end except for the larger CRJ-700 flights. The 11 ExpressJet aircraft will head to Dallas/Ft Worth to operate from that hub.

Why is American doing this? Simple. Costs. American Eagle is a higher cost operator but American was hamstrung to do much about that until it went into bankruptcy (especially since it owns the thing). So now it can break all kinds of contracts and do just about anything it wants. This deal with SkyWest helps with costs on a couple levels. Some if it is just having lower operating costs. But there’s also a benefit by having Eagle close its small crew base in LA. The CRJ-700 flights that it continues to operate will be flown by crews from elsewhere. And since SkyWest already has a massive operation at LAX flying for United and Delta, it’s easy for the airline to just grow its operation a little bit.

But why is SkyWest doing this? That one is easy. You will recall that Delta recently made a deal with SkyWest that sees a bunch of CRJ-200s get parked. SkyWest must have been desperate to find a home for those airplanes, and this is a start. I would bet it gave American a very good deal since it wanted to get those airplanes flying again and didn’t exactly have a ton of options. This should also give SkyWest an in for getting a piece of the big 70-90 seat business that American will be throwing around. Remember, now that the pilot contract has been broken, that restriction keeping American flying only 47 regional jets with more than 50 seats is toast. I would imagine we’ll see hundreds of these airplanes come into the operation, regardless of who is running American. And SkyWest will certainly want a piece of that.

So now, American Eagle will be just a brand instead of an actual airline. In fact, American Eagle the airline is going to have to get a new name. I hear SureJet is still available.

If you’re a passenger that’s used to flying American Eagle, then you might notice a difference here. But if you’re a passenger used to flying regionals on other airlines, this is just going to feel a lot like that. But this is just the tip of the iceberg. This is a lot more coming.

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]

Why is SkyWest Buying ExpressJet? – BNET Headwinds
You’ve probably been wondering why I was silent on this, but it was just a backlog of posts on the BNET site.

Why Delta Airlines Decided to Invade Iceland – BNET Headwinds
Delta’s going to Iceland, just like everyone else. But I don’t think it’s a bad move.

Stressed JetBlue attendant not flying solo – Crain’s New York Business
Crain’s asked me about the now famous JetBlue flight attendant who popped a slide and walked away.

JetBlue’s Stress Test: A Peek at the Secret Fantasy of Every Flight Attendant – BNET Headwinds
I honestly didn’t want to write about this, but the story blew up so fast, that I had to jump in.

Pilot Outsourcing a Tough Challenge for United-Continental Merger – BNET Headwinds
Pilot scope clauses are going to be front and center in the United/Continental merger. Did the SkyWest acquisition of ExpressJet have something to do with that?

JetBlue Plays It Smart (and Serious) After Steven Slater Incident – BNET Headwinds
It’s been an interesting week for JetBlue, and now the airline is talking directly to its employees about the Steven Slater incident. It’s an excellent letter.

You cheeseheads may still be hurting from your second Favre-related beatdown this year, but you can rejoice that you now have yet another airline coming to town. SkyWest (yes, the regional airline) will begin flying for AirTran in Milwaukee.

It’s very clear that this is happening because of the AirTran deal, but it’s not your traditional regional contract. Then again, it’s not exactly the “innovative” and “groundbreaking” contract that these guys are proclaiming it is. This has been done before many times. The airplanes will say SkyWest on them, but you’ll have to go to AirTran to book. It’s a lot like the deal they had with Delta back in the day.

You may remember that SkyWest was flying as Midwest Connect until Republic came in and booted them out. Like most airlines, SkyWest has more 50 seat jets lying around than they need, so they figured they could just put them back into use on routes they know and love. Only now, they’ll get passengers from AirTran instead of Midwest.

The 50 seaters will fly from Milwaukee to Akron/Canton (Jan 5), Des Moines (Feb 11), Indianapolis (Jan 5), Omaha (Feb 11), Pittsburgh (Dec 4), and St Louis (Dec 4). All of those are Midwest markets except for Akron/Canton, which is a big airport for AirTran. Nice.

Some of you may remember AirTran’s last effort to use 50 seat jets. Back in 2002, they signed a deal with Air Wisconsin to fly as AirTran Jet Connect. That ended in 2004 when the airline realized 50 seat jets didn’t make much money. Some are already saying that this won’t work this time around, but this is a totally different model. This will work out just fine for AirTran, though SkyWest might not be as thrilled.

Before, it was a capacity purchase agreement which meant that AirTran bought the seats to resell under their own name and Air Wisconsin received a guaranteed profit. Now, it’s a prorate agreement. SkyWest is flying these routes at its own risk and AirTran gets to share in the revenue. So SkyWest has a big burden here while AirTran has none.

If you listen to the AirTran pilots, this is the end of the world. Their press release says “Outsourcing: Bad for Business.” Hmm, not so sure about that. They do say that AirTran passengers expect to be flown on AirTran planes and that means XM Radio, wireless internet, and business class. Hmm, maybe, but they aren’t going to get that from Milwaukee to these cities.

Granted, Pittsburgh, Indy, and St Louis have mainline service from AirTran right now, so this tells me that those flights are really weak. It’s either a 50 seater that has a shot at making money or no service at all. I’d say it’s good for business with that perspective.

I suppose it’s AirTran’s fault that the pilots are responding this way. Back when they discontinued JetConnect, AirTran said they “could operate the Boeing 717 more efficiently than the Canadair regional jets in short-haul markets.” They may have thought that sounded good at the time, but now the AirTran pilots want them to stand by that statement.

Unfortunately for the pilots, that’s just not true. When AirTran started JetConnect, they served three cities – Pensacola, Greensboro, and Savannah. Only Pensacola is still served by AirTran today. I guess those 717s didn’t work out as well as they hoped on those lighter routes.

In my mind, this comes down to just a couple of things. SkyWest has a bunch of 50 seaters lying around and is desperate to find a home for them. AirTran wants to continue to put the squeeze on Midwest in Milwaukee. Combine the two and, voila, you have a plan.

Will this work? If I had to place bets, I’d guess no, but hey, I’ve been wrong before. If I’m AirTran, I love this deal since I have absolutely no risk and I get to strengthen my network out of Milwaukee. If I’m SkyWest, well, it’s the best I can get right now, and that’s scary.

[Updated 11/5 @ 809s to clarify that this won't be sold under the SkyWest code]