American Eagle Airlines has announced that it’s changing its name to Envoy, but it will keep flying under the American Eagle brand. Confused yet? You aren’t alone. American Eagle has become something that people don’t quite understand entirely, so let me see if I can explain. It all goes back a few years…
Many years ago in a galaxy far, far away, airlines decided to start abandoning smaller routes if the government would let them. Local service carriers popped up (Allegheny, Mohawk, and Frontier, to name a few) to serve smaller markets, and people were able to connect between the smaller and larger airlines. After deregulation, the big carriers realized that there was more value in keeping people on their own airline but they weren’t about to start flying those routes themselves. The regional carrier relationship was born.
The big guys realized they could effectively outsource small market flying to regional operators. That operator would fly under the mainline airline’s code but nearly always with a slightly modified name. That’s how we ended up with names like United Express, Delta Connection, Northwest Airlink, and yes, American Eagle.
When American Eagle started operating in the 1980s, flights were run by several different carriers you’ve probably never heard of. Airlines like Simmons and Wings West flew their airplanes under the American Eagle brand. They were independent airlines but you could book them under the AA code.
In the late 1980s, American had a new strategy. It decided that it still liked having separate airlines running regional services but it wanted to own those airlines directly. Slowly but surely, the airlines were consolidated. Then in 1998, Simmons was merged with Wings West and Flagship to form a single airline, American Eagle Airlines. With the exception of San Juan-based turboprops which were operated by another wholly-owned subsidiary, Executive, all American Eagle-branded flights were flown by American Eagle Airlines.
After American acquired TWA, it found itself with the former Trans World Express carrier contracts. It wanted to continue to use them, but (I believe due to union labor agreements) it couldn’t use the American Eagle name. So those airlines began operating as AmericanConnection. American stuck with both those brands throughout the 2000s. Then it went into bankruptcy.
In bankruptcy, American decided to do some house-cleaning. It chose to begin operating its regionals more like United and Delta. The AmericanConnection brand was ditched, and all regional flying was to be done under the American Eagle name. It even brought in new airlines (like SkyWest in LA) to do regional flying under the brand. When the turboprops went away, little Executive was shut down, but American Eagle continued to fly even though other airlines used the brand as well. That had to change, so American Eagle Airlines became Envoy.
Everyone following so far? I don’t think the Envoy name is a bad one. As I wrote in Conde Nast, the name matters most to the employees since travelers barely see it. And the message to employees is that the airline is a messenger for the American brand. The only confusing bit is that Envoy is also the current name for US Airways business class product. But that’s going away, and we know that US Airways has a long tradition of keeping traditional names in the family. (Its wholly-owned regionals are named PSA and Piedmont.)
So now we have Envoy flying as American Eagle, but how much flying will it actually do? All of the contracts for new flying out of the bankruptcy went to competitors. American Eagle’s costs were just too high. Before bankruptcy, American had delusions of spinning the airline off to a third party, but after the merger, the new management team liked the idea of keeping it in-house. It would complement PSA and Piedmont but first, costs had to come down.
Just recently, the pilot union leadership agreed to a new contract that would make Envoy, more competitive. That cleared the way for 60 new Embraer 175s to be flown by Envoy with the chance for more. But the total fleet will shrink.
Envoy, or what will become Envoy shortly, today flies just over 220 airplanes, mostly 50-seat regional jets. American has committed to Envoy continuing to fly at least 170 airplanes for the next 10 years if the pilots ratify the new agreement. That’s a pretty strong commitment, but it does mean less American Eagle flying for the airline that used to literally be American Eagle.
Fascinating. But ultimately, as the consumer, I could care less what the corporate name of the airline is, so long as it’s painted with the same name of the airline I’m trying to earn miles on.
One thing this post doesn’t mention is how American Eagle & the other like minded opperators have been expanding there flying to include routes between large cities & not just hub feeders. As an example, skywest flies between LAX, SFO, PDX & SEA with regional planes. Alasca on similar routes uses mostly 737’s.
Corporate name really doesn’t matter, but who is behind the controls does. As American Airlines start to outsource flying, the training and experience of it’s crews also gets outsource.
Nobody cares until planes start to fall out of the sky.
horrible name…seems like the same story as pinnacle name change to endeavor…the regional industry is a disaster for employees and customers…the only ones that made out like a bandit were the owners/ceo/coo etc. this should have been illegal from day 1 it is false advertising..selling tickets to some innocent old lady that thinks she is buying on united but really its a poorly run airline united express-“colgan”which pays all employees subpar wages amazing these operators pay horrible wages…yet they loose money and have to keep on changeing their names
What’s the value in keeping Envoy, Piedmont, and PSA separate? Shouldn’t they all combine into one?
I would assume union leverage. When you can just shuffle flights to the subsidiary with the best contract.
A bit of that. Although at least in US Airways’s case they have delineated them by equipment type, which makes the operation smoother.
AFAIK, one of the national airlines had the pilots at all of their regionals organized in the same union and under the same (or similar contracts.) with the same bargaining cycle.
And that makes sense too. A market like TRI may not make sense for Envoy but Piedmont with smaller planes could make it work. Whereas envoy could make bigger planes work on a route to MHT..
One reason to keep all of these airlines separate might be to provide more competition in the drive to lower pay. Fewer airlines means more pricing power.
DL – They tend to be specialist operators. Piedmont only flies turboprops and also has a large ground handling business. PSA is a CRJ specialist that’s also getting a lot more CRJ-900s. Meanwhile Eagle is an Embraer specialist which flies ERJs and is now going to get the EMB-175 if the pilots approve the contract. So I would assume there’s some sort of operational segregation in that.
But also, what everyone airlines wants to avoid is the Comair problem. When Comair pilots shut the airline down a decade ago in a labor dispute, Delta basically had Cincinnati shut down entirely. That’s why airlines prefer multiple partners with multiple operators in each hub so that no one regional can shut down everything.
You raise a valid point, Brett. For purposes of clarification, my post above wasn’t meant to be critical. It was merely an observation. I’m a big believer in the idea that there are two valid sides of a debate or a negotiation.
DesertGhost – I didn’t see your original comment as being critical at all.
Hey little correction for you CF. The Eagle “Envoy” union leadership has voted to put the E170 and concessionary offer up for a vote to the membership. The vote has not happened yet so it is a little early to say they agreed to a new contract. FYI
Mike – I made that clear in my last paragraph but apparently the next to last paragraph wasn’t clear enough because you aren’t the first to say this. I adjusted that one to now say that pilot union leadership has approved a contract. It will, as mentioned in the last paragraph, be sent to pilots for ratification.
Cranky, what do you foresee happening to Air Wisconsin after the US/AA merger? I love that little regional. :)
Tatum – No clue about Air Wisconsin. They’re a niche operator with CRJs and those aren’t exactly in demand. I would be surprised if it had much of a long term future with American since all the new flying appears to be going to other regionals so far.
Cranky this is not what I need to be hearing :-). Give me some hope please.
William Swelbar wrote a piece on his blog yesterday about the “race to the bottom” for regional airline pay. That was the genesis of my above replies.
To Swelbar’s point, I’m a bit surprised that there hasn’t been more consolidation in the regional airline industry. That would be one way to level the playing field a bit. I also have to wonder if Delta and American don’t want to keep at least one in-house carrier to provide some competition to the other providers.
I’m not “for” either labor or business. As I wrote above, I believe there are usually two valid sides to most debates and / or negotiations.
While you have a valid points, I believe its important to note that the majors are looking to lock-in regional capacity at low rates. The Envoy deal is for 10 years, PSA recently signed (I believe) a 10 year concessionary deal. The trends suggest an upcoming pilot shortage, especially in the regional feed side that would otherwise put inflationary pressure on wages.
Also there has been some consolidation, Colgan was brought into Pinnacle before the Endeavour rebranding. Comair was shuttered Compass took in Mesaba.
*Note – I am a Piedmont employee, though on the ground handling side, not flight.
What annoys me is everything depends on a union to vote to agree or not. A company should be able to do what they think is best and not have to get (union) workers approval first. Those in a union (yes I’ve been in one) seem to always forget it’s the company that pays their salary not the union and it’s they who are out of a job if the company goes belly up not anyone at the union.
I like the photo and caption…..lol
David SF – The company gave them a choice. If you vote for the wage concessions, you’ll get more flying and will be guaranteed at least 170 airplanes. If you vote against it, then you will not get new flying and, reading between the lines, you will see your flying reduced to nothing over time. It does seem unfair that the fate of other employees is subject to whatever the pilots decide, but other than that, I don’t see a reason they shouldn’t have a say in their future.
David I agree with your comment when you have a group people holding a company hostage when times are tough but when every quarterly report comes out that says the company is make millions but at the company say you are making to much it is hard to swallow.
The “makes millions” has to be put in context. Sure airlines have finally started making $100-200 million, but they’re doing that on $4-6 billion in revenue! (or for a better comparison, $4,000-6,000 million of revenue.)
I’m not saying that workers don’t deserve part of that pie, but there has to be a balance.
The rate of return (the percentage of top line income that’s left after expenses and other items like taxes) is a better measure of profitability than are pure dollars. Historically, airline rates of return have been pathetic; that is, when there’s been a rate of return. Things have changed recently, however. It’s interesting to note that more than one airline has been profitable long enough that they now have to set aside money for possible income taxes.
Its important to remember that the majors are trying to lock in low-wage contracts before a presumed pilot shortage would push wage pressures higher. While I would certainly be willing to agree that unions can push things too far, and some national unions can be questionable in their real support for individual locals, unionism overall is designed to allow employees to have a voice in their working conditions. My law school labor law professors favorite saying was unions were a free market solution to a free market problem.
“Many years ago in a galaxy far, far away, airlines decided to start abandoning smaller routes if the government would let them”
Is this exactly how it went? It’s all before my time, but I thought this was also through design of the regulator, as much as it was through the desire of the long-haul airlines. The regulator designated several airlines as trunk airlines for long-haul service, and other airlines as local-service for regional service. Trunk airlines did serve smaller cities, but as part of stops on multi-stop milk-run long haul routes.
Here is the oldest route map I could quickly find for American. Not much small city service there.
Northwest, same story, save some weirdness in Montana and North Dakota.
Of course, these maps may be too new to show any small-city service before it was dropped.
This (older) Eastern route map shows small city service, but a good portion of it as part of milk runs.
Then again, in those cozy old anti-competitive days, the wishes of the majority of airlines, and the wishes of the regulator may have often been the same thing.
In the scheme of regulation, the CAB while concerned with competitiveness and safety, also oversaw route/service preservation as a major goal. Just like the railroads in that era under the ICC, the ability to drop a route was darned near impossible and could take years. And the ICC/CAB did not care if you lost money on the route or not (their way of figuring profit and loss was not always the reality of the situation).
That was just one of the hurdles airlines and others had to jump while maintaining profitability. Rate setting was also a nightmare in paperwork and sometimes futility. The absurdity of this system (no matter what mode of transport) was pointed out in the famous Yak Fat Rate Case.
There are some today who wish to bring back regulation of transport to the days of CAB/ICC. However turning back the clock will serve only to bankrupt current carriers, and create a national mess.
“There are some today who wish to bring back regulation of transport to the days of CAB/ICC.”
I don’t think there is really anybody who truly feels that way. People might argue for more of different sorts of regulation – there are specific new regulations that I would support – but I don’t think there are many people who actually want to go back to how it was under the CAB – with the government approving routes and fares.
Also, it seems that most people don’t realize how much cheaper air travel is today, compared to the 1960s and 1970s. Nostalgia is a dangerously misleading thing.
However, I thought the airlines who could effectively lobby the government for favorable route decisions were quite profitable, back in those days. High fares, limited competition – if you got the routes you wanted, it was guaranteed profit, wasn’t it?
What you need to remember is that before deregulation in 1978, all the routes of each airline had to be approved by the CAB (Civil Aeronautics Board). This resulted in some crazy route maps and artificially inflated the value of small cities. As an example look at this route map for Piedmont in 1978 from the site you referenced– http://www.departedflights.com/PI121578.html . Piedmont had a large presence in both Atlanta and New York, and if allowed would certainly have had several flights between the two cities. However Eastern and Delta had rights to that route, not Piedmont. But Piedmont wanted to fly between the two large cities, and Piedmont’s customers wanted to fly between the two large cities, so Piedmont received approval to serve many of the same small cities in the Carolinas and Virginia from both Atlanta and New York, so Piedmont customers could fly from New York to Atlanta, with an intermediate stop in Jacksonville, NC, or Bristol, VA, or Lewisburg, WV, or Roanoke, VA, or Fayetteville, NC. Once the industry was deregulated, and Piedmont was free to fly wherever they wanted to, they just flew nonstop on the New York-Atlanta route without the need for the connections in the smaller cities.
Nice summary. One small note. I think the first branded AA flying may have been props into St Thomas, Virgin Islands, following the 1976 AA flight 625 727 crash there which resulted in the AA pilots’ union refusing to fly into STT. Which makes the Excutive Airlines (DBA American Eagle) exit from all inter-island flying seem a little sadder after almost 40 years.
The trunk (later known as major) airlines did serve all sorts of small communities if you go back to the piston prop days, but the growth of local service airlines in the 50’s and 60’s slowly but surely took many of those communities off the roster of the majors. For example in 1948 American flew to Bridgeport, Wilmington, Roanoke, Lynchburg, Bristol, Texarkana, Abilene, Erie, Elmira, Battle Creek, New Haven, Williamsport, Wilkes-Barre, South Bend, Ann Arbor, Joplin, Springfield MO, Springfield IL, Peoria, Elkins, Parkersburg, and Douglas AZ. When airlines like Southern, Trans Texas, North Central, Allegheny, Mohawk, Bonanza and others caught their stride in the 50’s and 60’s some of their new destinations got their first-ever airline service but many others had been on the DC3 and DC4 milk runs of Braniff, United, Eastern and the rest of the trunks. IT wasn’t a speedy process to pass small communities off to the next tier down but it happened. And by the mid 1960’s the local service airlines were already starting to purge their own smallest markets through a similar slow, arduous process to third-level commuter airlines.