The long-troubled relationship between American and its regional partner Mesa has finally reached its conclusion. According to Cirium data and confirmed through an internal memo, Mesa’s last day operating as American Eagle will be April 3, 2023. With this change, Mesa’s only regional relationship is with United, which it is apparently now embracing whole-heartedly by planning to move its CRJ-900s over there. This now completes the circle of life that American started when it snatched Air Wisconsin away from United.
Mesa has had a turbulent existence for nearly its entire life. The Cirum data I have goes back to 2003, and by then Mesa was a well-established regional jet operator which also had a still sizable presence in turboprops. It was flying for America West, US Airways, and United with Delta coming on in 2005. And it’s all been downhill since.
Mesa Air Group Monthly Operations by Marketing Airline
Data via Cirium
Through mergers and consolidation, airlines disappeared but Mesa somehow continued to maintain contracts, or at least most of them. Delta dropped Mesa for performance issues by 2010, but over the last decade, Mesa had settled into being a two-partner player.
The United partnership has taken many twists and turns, but after nearly losing the deal entirely, Mesa scored an extension in 2013 to keep flying 20 CRJ-700s and start flying Embraer 175s for the airline. The CRJ-700s were eventually cast off and Mesa now has a large fleet of Embraers. When it nearly ran out of money, United bought the Embraer 175s but let Mesa continue to operate them.
On the American side, things have always been more complicated. Mesa worked with both US Airways and America West before their merger and the contract has continued until today. In recent times, the only Mesa flying beyond these two partners is a small freight contract using 737s, and there aren’t really prospects for more in today’s regional world. So you’d think having both American and United would be important to ensure Mesa’s long term survival. But apparently not.
Mesa was riding high when it scored an increase in CRJ-900 flying from US Airways just before the American merger, thanks to the airline’s famously low costs and a long-standing relationship between management teams, but it’s been downhill ever since. Looking at the recent war of words between two sides, the relationship had simply become untenable.
In 2020, with more than half the airplanes on contract expiring and American getting increasingly angry about performance issues, the airlines agreed to reduce flying to only 40 airplanes starting January 2021. Airplanes, however, weren’t the problem. Mesa just couldn’t staff the airplanes it had, and even this new contract proved to be too much.
If we assume airplanes would fly an average 10 block hours per day, Mesa held up its end of the bargain through 2021, but then…
Number of Mesa Aircraft Flying for American Assuming 10 Block Hours per Aircraft per Day
Data via Cirium
Mesa has really only been flying 20 to 25 airplanes for American thanks to a pilot shortage. It ended up spiking its pay rates to attract new pilots, but according to a Mesa company memo CNBC reported, American wouldn’t let Mesa pass through those higher costs so Mesa was bleeding. American had put this in motion by paying its wholly-owned regional pilots more money, so it in effect forced Mesa’s hand. Then it chopped the hand off. This was not a friendly break-up.
Mesa was now an airline with diminished flying of only about 20 airplanes, a deteriorating relationship with American, and possibly most importantly it was no longer that low-cost operator that helped it survive in the past. American finally reached a point where it felt comfortable being done.
With only about 20 airplanes needing to be replaced, American figured it could use its Air Wisconsin pilot acquisition to make this work out. In the short-term, it could supplement Air Wisconsin with additional Republic and Piedmont flying in Chicago to allow Envoy and SkyWest to move some capacity from there into DFW and Phoenix. In the long term, Envoy would grow more in Phoenix and PSA would grow more at DFW, with both airlines having announced plans to open bases in those cities.
This would allow American to wave goodbye to Mesa. Meanwhile, United, an airline desperate for more regional flying, was willing to pay those higher rates to bring Mesa’s CRJ-900s into the fold, at least, according to that Mesa company memo that was not confirmed by United. Make no mistake, however. This has nothing to do with the airplanes. You’ll hear that from many people, but it’s wrong. This is all about pilots and how quickly they can start flying passengers.
United doesn’t want CRJ-900s, but it’s the fastest way to get pilots flying. At first blush, I didn’t understand how United could take on additional 76-seaters. United’s current pilot contract has strict limits on 76-seaters capping the airline at 153. That has been split out with 65 at SkyWest, 60 at Mesa, and 28 at Republic. It can’t add more, so how do these CRJ-900s fit in?
Playing with the numbers gives us a clue. United just does not have the regional pilots to fully fly those 153 airplanes. If we assume utilization of 10 hours per day per airplane, Republic is close to full utilization in the January 2023 schedule. Mesa and SkyWest are not. But let’s focus just on Mesa.
Mesa has 60 Embraer 175s with 76 seats and 20 with 70 seats. We can’t see how those are broken out because they use the same aircraft code, but if we assume 10 block hours per airplane per day, then Mesa is only flying about 35 airplanes out of the 80 right now. Even if we assume all the 70-seaters are parked already, that means there is still room for 25 more 76-seaters. This fits quite nicely with what Mesa can offer.
It just so happens that of Mesa’s CRJ-900s, there are 23 that are owned by Mesa and are the newest build aircraft — including 7 which haven’t even hit 8 years yet. It should be easy to park 23 under-utilized E175s, paint the 23 CRJ-900s, and get them in the air just in time for Air Wisconsin to start painting its planes in American’s livery.
Why not just take the pilots and have them fly the E175s? That requires training and training takes time. Air Wisconsin is leaving soon. There is no time to lose.
Like many stories this year, this one is all about pilots. While I’m sure American would have liked to have Mesa’s 20 airplane’s worth of flying, it didn’t want them at that higher cost. American figures now is the right time to move on. For United, it needs any pilots it can find. It may have just found 20 airplanes’ worth of them, and it’s willing to pay the price.