Editor’s Note: The original version of this post included American opportunity based on 965 aircraft in mainline fleet. The scope clause is based on narrowbody aircraft only, so it has been updated using the 839 narrowbody number.
I hope you enjoyed your one week break from me talking more about American’s small-city focus, but there’s so much more to talk about. Today, I want to get into American’s secret weapon, the pilot scope clause, and why it is what allows the airline to focus on small cities more than Delta or United.
Every pilot union has negotiated rules with the airline to limit just how much flying can be outsourced. There are rules governing codeshare partners big and small, mostly to prevent ridiculous abuses like when United hired Aer Lingus to fly from Dulles to Madrid. This was in 2010 at a very different United. It would never try this today, but pilots learned the hard way that this kind of thing needs to be in writing.
The most important fence has tended to be on the small end. Over the years as airlines developed regional partnership, you saw a lot of 19-seat turboprops buzzing around which didn’t particularly concern mainline pilots. But in the 1990s when regional jets came out, mainline pilots sounded alarm bells. Eventually, the three remaining legacy network carriers all settled into scope clauses that have governed what can be outsourced at the small end of the spectrum. Those haven’t changed in several years.
Delta came to agree with its pilots on a structure that limited outsourced flying by aircraft size. There are weight limits and other restrictions, but those don’t matter for the point of this discussion. What matters is this:
- no meaningful limit for 50-seaters and smaller
- 102 aircraft with 51-70 seats
- 153 aircraft with 71-76 seats
- +70 aircraft with 71-76 seats if Delta acquired a small narrowbody at mainline
Delta did take on the Boeing 717 and now the Airbus A220 at mainline, so it got those 70 extra airplanes. United took this exact scope clause as its own, but since United never ordered small narrowbodies, it remains with a 153 aircraft limit in the 71-76 seat category.
American was the last one to adopt its current limits, and it is completely different than what Delta and United did:
- total outsourced regional aircraft cannot exceed 75 percent of the size of the mainline narrowbody fleet
- no other limits up through 65 seats
- outsourced regional aircraft from 66-76 seats cannot exceed 40 percent of the size of the mainline narrowbody fleet
This is a lot more generous, so I wondered if it would stick. But it survived the last round of negotiations. That means American gets to keep this advantage going forward, and that is one reason it must like this small city plan. It can fly a lot more regionals than either Delta or United ever could, so it is defensible if there is money to be made.
What does this really mean in practice? Well, let’s take a look.
Data via Cirium
On the larger end, Delta and United are both maxed out. American is already significantly larger than Delta and it can still add another 50, assuming a mainline narrowbodyfleet of 839 airplanes, a number that will certainly grow. Delta may not have as many, but remember that it does have a large and growing fleet of smaller narrowbody aircraft in the mainline fleet. It’s United that has the fewest airplanes below 120 seats, but it wants bigger airplanes to feed its big city hubs.
On the smallest end, Delta has finished retiring all of its 50-seaters. American still has a fair number between Air Wisconsin and Piedmont, but it says they will be gone by the end of the decade. Meanwhile, United still has an enormous number, including 35 CRJ-700s that have been converted to the 50-seat CRJ-550. It has plans to nearly double that number, something that may or may not actually happen.
The most interesting space is in the mid-range regional world, United is maxed out and Delta appears to be about 10 aircraft shy. It has some airplanes parked right now, so this could be a pilot issue that has yet to be fully restored, but Delta is basically out of options. It doesn’t seem to care and is happy with the fleet it has. United is focused on getting big. That leaves American.
American has fewer seats on these airplanes, because it has that unique scope clause that allows a huge number of 65-seat airplanes. If it maxed out the 76-seaters and had 335 of them, it could still have 294 of those 65-seaters. That’s in addition to the 98 50-seaters. If it gets rid of those, it can add them to the 65-seat group.
In other words, American can create a virtual army of regional aircraft… if it can find them. The 76-seaters are no problem to source, and as we know, the airline has just bought some. It purchased 90 Embraer E175s with 43 more purchase rights. But the smaller aircraft are more of a challenge.
The best 65-seat airplane out there is the CRJ-700. It’s meant to have more seats, but as I understand it, trip costs are 6-8 percent below the Embraer 170/175 or even the CRJ-900. With so few seats onboard, that can make a real difference in seat costs.
The problem with the CRJ-700 is that there aren’t all that many left. As you know, the airplane was built by Bombardier, but it isn’t being made any longer. Bombardier sold the business to Mitsubishi, but Mitsubishi has no interest in making airplanes either. So what’s in the market is all there is.
Of the roughly 250 airplanes out there today, American already controls 140 of them between PSA and SkyWest. United controls another 74 with its GoJet CRJ-550 program. Some of those aren’t yet converted, but they’re under United’s control. And I can’t imagine United would have any interest in letting those go knowing that they’d just end up with American. Delta has another 17 of them.
SkyWest does have a few more flying in prorate service that it could move over to American, but that’s really about it. American’s only other option to significantly grow that fleet is to get an Embraer 170/175 and outfit it very lightly.
Flying those airplanes at these high pilot salaries with few seats can get very expensive very quickly. American likes the idea of these small cities, because nobody else is competing for them and the fares are higher. That may work, but it’s unclear just how much demand even exists in these markets that nobody else cares about. It’s a risk… in more ways than one.
The long term threat here is to American’s pilots. American loves to talk about small cities these days, and that is going to be a lot of outsourced flying. It also talks about how its widebody fleet is going to remain smaller, and the airline will rely heavily on its joint venture partners. Again… it’s outsourced flying. There may be ample opportunity to fly narrowbodies around North America along with some limited Transatlantic growth on the A321XLR, but pilots like widebodies and they won’t be getting many of them.
Fortunately for American, the pilot contract was just settled in summer 2023 for four years. It’ll take another couple years beyond that before anyone would expect to see another contract anyway. So American can try this strategy now with short-term impunity. By the time the next contract comes up, this strategy may be long gone anyway.
In the meantime, American is going to try to make this push, because it is in the unique position of being able to do so while Delta, United, and yes, Southwest, can’t even touch it… not that they want to.
49 comments on “Pilot Scope is American’s Secret Weapon, But It Should Tread Carefully”
Unless the scope summary I read for AA is outdated, AA’s regional scope is based on a percentage of their mainline Narrowbody Fleet, not their entire mainline fleet. So the calculation for scope room in the article is a bit inflated.
JH – Oh god, you’re right. I have gone back and updated the figures and text to base it on the currently narrowbody fleet of 839 instead of the 965 total mainline fleet. Thank you.
Much of American’s 76 seat shortfall has come largely from the loss of Mesa’s CRJ-900 flying.
Ah that explains to me why, since I travel to small cities for work, I’m so frequently on American’s small planes. I still contend, however, it has to do a lot with hub cities. If American had EWR and IAD and United were forced to deal with DCA and LGA for two of its largest hubs, would strategies be different?
Mike – Certainly so. American is saying its regional strategy is precisely because of its network needs and United says it doesn’t want more regional airplanes for the same reason.
It should be noted that APA **really,** doesn’t like their network plan.
https://www.alliedpilots.org/Services/View-FullArticle?ArticleId=12151
> “1995 Just Called – America West Wants its Business Model Back”
ouch
RIP CMH hublet :-/
In my own personal experience living in the Phoenix area, I must say that the flights I took on America West tended to be quite a bit better overall than those I took on American. The crews were usually better, as was the on-time performance. The airline so many American “fans” remember never really existed. Over all, the flights I took on America West, Northwest, Delta, Continental, North Central, Hughes Airwest, Republic, and United all tended to be better than the flights I took on American – which were always carried out competently. The differences were minor, but noticeable.
I’m one of those crazy people who believe that an airline’s primary function is to transport people and goods from one place to another safely and on-time – not to show movies, serve meals, or provide a place to sleep, although those are important aspects of making a long trip more tolerable – and I mean tolerable. I’ve never had a truly great experience flying. It’s always been a way to get somewhere.
Thank you for the interesting link, please see my related comment below
If nobody else is competing for small cities, they may as well stick with 50-seaters or use turboprops in those markets. It’s not like passengers will have much choice there.
The scope clauses are frustrating because they introduce such obvious inefficiency. The E175SC and other 70-seat E175 configurations are wasteful and not revenue maximizing. There would be a bigger “pie” of revenue to share with pilots and other employees if they could sell the additional 6 seats. The CRJ-550 is even more wasteful – UA is pouring new capital spending into an obsolete platform with high trips costs, because that’s what they’re allowed to operate under their contract.
If given a straight choice between “operate X flights using CRJ-550s on regionals” and “operate the same exact flights using 76-seat E175s”, then *everyone* would be better off choosing the latter. It would generate incremental revenue and connecting passenger volume, which would translate to more money available in collective bargaining and more passenger volume to support the mainline routes.
The problem is that they aren’t considered in isolation, they’re considered a bargaining chip in the larger negotiation, so it’s difficult to reach a better equilibrium even if one exists.
The really efficient state would be raise the MTOW restriction and bump the maximum passenger limit to 80 so that regionals can replace their remaining ERJ and CRJ fleets with efficient E175-E2s and run them at full capacity. It’s crazy that airlines are still forced to buy *new* regional jets with a 1980s-era engine when a much more modern and efficient option has been available since 2018. My guess is that airlines would be willing to accept a significant cut to the total *number* of regional aircraft that they operate if they were allowed to have a more efficient fleet mix.
The 65-seat and 70-seat caps are also very inefficient because you still need 2 flight attendants. Compared to a 50-seater, you are paying the full cost of an additional FA but only getting an incremental 15-20 passengers.
Of course, the airlines could fly as many of these planes as they wanted, without any scope restriction, if they brought all that flying in house. The regionals exist in part to fly smaller planes, and in part as a pure arbitrage play for cheaper labor.
It’s also clear that the pilots would not agree with your take that *everyone* would be better off with no scope limits.
> It’s also clear that the pilots would not agree with your take that *everyone* would be better off with no scope limits.
I didn’t say that. I said that *conditional on the airlines flying a certain number of regional airliners*, everyone is better off if those regional airliners are efficient from a trip cost and crewing perspective.
Even if the expansion of regional capacity is an issue, I think there is room to reach a reasonable bargain here in which airlines reduce the *number* of regional aircraft in exchange for being able to operate a more efficient fleet mix.
I’m somewhat surprised that neither United nor Delta have taken advantage of the turboprop “loophole” in their scope clauses. As I understand it, their scope clauses only count regional *jets*, not turboprops. If they were willing to reintroduce turboprops, they could run an essentially unlimited number of short-haul regional routes, and would only be constrained by the pilot labor market.
At the same time, the only regional turboprop regional airliner that’s currently in production is the ATR 72, which isn’t an ideal airplane for a bunch of reasons. I also might be underestimating passenger preference for jets.
Turboprop opportunities are quite limited with current pilot hiring rules. Maintenance costs for them are high and fuel savings are less than they once were, so without pilot cost savings, they’re not economically viable.
Without those restrictions, you bet airlines would utilize them–just look north of the border where they flourish.
No “loophole” at Delta. All turboprops count toward the appropriate 50/70/76 seat scope limit.
UA’s “loophole” only applies to turboprops not more than 37 seats, so DHC-200’s at 37 seats or EMB-120’s at 30.
The real question is what AA gets out of this and you have to look at lots of data sources to try to put it all together.
Based on domestic revenue as reported on each carrier’s financial statements, AA slightly edged out DL as the largest carrier of domestic revenue.
Since airlines don’t break out mainline vs. regional stats (for the most part), the DOT helps see that DL operates more mainline flights than AA or UA and flies the most domestic mainline RPMs.
If you look at the percentage of flights by carrier at airports, DL’s ATL hub is the megahub and 85% of DL’s flights there are mainline. CLT and DFW are AA’s megahubs but they operate at best 65% mainline at the latter and 55% at the former. Even DL’s DTW and SLC hubs – which were previously at least half regional pre-covid – are now 65% mainline. Because of UA’s relatively small domestic system compared to AA and DL, UA’s hub percentages by mainline vs. regional are on the order of what AA operates even though UA has fewer regional jets to work with. UA and AA both still say they will have 50 seaters in their contracted operations for the remainder of the decade.
Each of the big 3 are within a dozen or so domestic cities served with regional and mainline combined. There are a handful of cities that each carrier serves uniquely.
The notion that AA has a real network advantage that justifies the larger number of RJs is not supported by data.
In contrast, AA also outsources mainline flying – to AS on the west coast – and tried to do it as part of the NEA with B6 on the east coast.
AA pilots have objected to AA’s small city/large number of RJ strategy but there isn’t much they can do about it because AA is following the contract.
The real multi-billion dollar question is whether AA is able to validate that all of those extra RJs will translate into more revenue than DL and UA’s strategies, the former of which has replaced 50 seaters with small mainline aircraft and the latter which is still holding onto 50 seaters as long as possible.
You can always count on Tim Dunn to turn an article about AA into an opportunity to prove Delta’s supremacy unig cherry-picked data to prove an irrelevant point.
typo correction: *using
The data I provided is relevant and shows that the big 3 each are pursuing different strategies and those strategies manifest themselves in differences in how hubs operate and also in how revenue and capacity is generated.
Delta made the decision years ago to shrink the size of its regional fleet and allowed scope changes to support its strategies. It carries more revenue on mainline than AA or UA. The fact that DL did not try to revisit scope clauses in the last contract says they are comfortable w/ their domestic strategy.
United has the least large RJs to work w/, pays a premium per seat to fly passengers on small RJs but is focused on mainline growth more than getting rid of small RJs.
UA has long been focused on large coastal cities and smaller interior hubs but is beefing up its interior hubs; DL has historically been stronger in interior hubs and has really grown its coastal hubs.
AA has had a pretty good mix but is losing share in coastal markets.
DL and UA are similar to their historic size internationally but both are committed to growth and have airplanes coming to support that growth while AA is smaller internationally and mgmt is not bringing in enough widebodies to grow.
All of that is relevant and the pilots can see it.
One has to keep in mind that Tim Dunn truly believes that his Delta is the world’s only PERFECT airline – hence, the constant, usually irrelevant comparisons to those airlines that don’t quite measure up. But in fairness, I must also point out that Tim does make some good points from time to time.
Reminds me about the old saying of stopped clocks being right twice a day. That’s a little harsh though. Nevertheless…
It’s the uncanny ability to cherrypick irrelevant data that does it for me. I was a network planner for yeras and never in my career was there a conversation around percent of megahub flying on regional aircraft. It’s just unnecesary, irrelavant information commented on every article, however unrelated to Delta, to promote Delta. I’m not sure if you’re an exec at Delta, or just an employee or a huge fan, but not everything that happens in the airline world has to revolve around Delta. It’s like a Pavlovian response to write “Delta” every time a bell rings.
Tim Dunn was a former employee at Delta and was rumoured to be fired from his job there.
He went under names like worldtraveler and atl100million on airliners.net before getting up banned from there for constantly resorting to insults when he lost the argument, which he does a lot. He cherry picks facts a lot from experience.
and this is related to the topic at hand how?
The definition of “to cherrypick” is to select the best or most desirable.
CF has done a great job of digging into AA’s RJ and domestic network strategy but he hasn’t included every detail; perhaps he will go deeper still.
Accurate and complete analysis requires including data even when it says something negative. The entire basis of this article is comparative with DL and UA including the chart which is on CF’s homepage.
Nearly all of the RJs that schedules operate to/from an AA hub; that is part of how they have developed their domestic small city strategy. Looking at the small cities those RJs serve is one part of the puzzle; the other part is the hubs to which they are connected.
AA has a number of large hubs in the total number of flights relative to its competitors. To no surprise, they have a much higher percentage of flights at their hubs that are operated by RJs, esp. compared to DL. AA and DL get very similar amounts of revenue so it is very relevant how that revenue is generated.
AA, DL and UA serve within a dozen or so of the same domestic systems. DL happens to serve considerably more domestic cities with mainline. It isn’t a surprise that DL’s smaller number of RJs – and no 50 seaters as CF notes – means a higher percentage of mainline flights at its hubs.
And part of the concern that AA pilots have – which should be reflective of other AA labor groups – is that a higher percentage of their network’s flying is done by RJs; DL transported more domestic RPMs on mainline than AA.
DL and UA both have extensive widebody orders which they intend to use to grow in the next few years while AA keeps pushing back its much lower number of widebody orders back even further – even as they add more large RJs.
And AA’s strategy has so far not delivered higher margins or more revenue than its competitors. It is absolutely fair to look at all of the factors in AA’s domestic strategy and conclude that other airlines are putting the pieces together differently and coming up with better results, including for labor.
While the overall focus appears to be on flying larger aircraft, that is larger than 50 seats, the result is that more and more cities loose service because they can’t support 50 seaters, let along 70 – 76 seaters.
Of course this problem is exacerbated by the lack of suitable aircraft acknowledging the customer preference for pure jets, rather than turbo-props.
I have no idea what the solution will be, but the potential market, serving smaller cities with smaller aircraft is growing. It will be interesting to see how it develops! None of the majors appear to be in a position to capitalize here – even AA.
American’s pilots may not like the clause, but they just got a collective $10 BILLION raise.
That’s half a million dollars EACH.
That will buy a lot of cooperation.
If one looks at slide number 97 of the recent American Airlines investor day presentation, it shows that the projected regional aircraft fleet is slated to remain at roughly 580 units. Elsewhere, the presentation generally mentions upgauging the size of regional aircraft, not increasing the number. The additional 170 narrowbody aircraft on order would allow the airline to add 68 (40% of 170) new E-175s, and retire a like number of smaller aircraft. These are real numbers, not made-up or conveniently interpreted “data.”
Most businesses maximize their perceived strengths and minimize their perceived weaknesses, why can’t airlines do the same? Why do they all have to have exactly the same business model?
As Mark Twain observed, “There are three kinds of lies – lies, damned lies, and statistics.”
Seems that the APA and Cranky have significant different interpretations of the impact of the scope clause on this strategy.
From the APA item linked above: “The increased emphasis on short-haul domestic flying also leaves the company on an inevitable collision course with our Scope clause. Section 1 of our contract is the foundation of our flying agreement, capping management’s ability to fly regional jets while also limiting their ability to fly from non-hub cities to other non-hub cities with RJs (spoke-to-spoke).”
“Inevitable collision course with our scope clause” and “virtual army of regional aircraft” seen to be quite contradictory so I’m very interested in seeing what I’m missing here.
As an aside, I strongly believe that the president of the APA should refrain from using the term “collision course” in official communications.
The Scope Cause will clearly become a much bigger sticking point in the next round of contract negotiations. The APA President has made it clear that they don’t like the business model that they indirectly agreed to.
APA has traditionally always hated American Airlines management, and that isn’t going to change soon.
I think the “collision course” comment is just hyperbole, or referring to that.
I’m curious about the spoke to spoke flying they specifically referenced, are there further restrictions on that type of flying beyond the general scope clause?
Excerpt from the APA contract (which I broke up to make it easier to read):
>Hubs and Major Airport Departures.
>Beginning with the calendar quarter starting July 1, 2012, and for each calendar quarter
thereafter, 85% of departures by turbojet aircraft operated under Section 1.D. and
turboprop aircraft counted under section 1.D.4.c.(3) shall be into or out of the following
hubs and major airports:
>DFW, ORD, MIA, LAX, and JFK.
>If the number of departures
scheduled by the Company at any other airport exceeds an average of one hundred (100)
per day over a six (6) month period, such airport shall be added to the above list, for as
long as the average number of departures at such airport remains above one hundred
(100) per day for the previous six (6) months.
tldr 85% of regional jet flights must touch a hub.
Very interesting, thank you. Also interesting is the LGA not included.
This is a very old pre-merger list. I’m not sure what’s in there now, but I have asked around.
A220/Bill – Ok, I got the full details from APA on this clause. Basically, every six months, there is an evaluation looking back at the previous six month period. During that period, 85% of regional departures have to be touching a hub.
A hub is defined as DFW, ORD, MIA, LAX, and JFK any, as A220 showed, any other station with more than 100 daily departures during that six month period. BUT, APA tells me that this requires having 100 mainline departures to be considered a hub. By that measure, CLT, PHL, and PHX are hubs and count here.
That being said, both DCA and LaGuardia fall short. (LAX and JFK do as well, but they are specifically named, so it doesn’t matter how many departures they have. They count.) The thing is, if there are slots that are specifically for commuters, then those don’t count toward the total since mainline can’t fly it anyway. That’s like a quarter of the DCA slots. So by my calculation, they are pretty close to the edge here. After DCA and LaGuardia, Austin is biggest followed by Boston in having regional flights that don’t touch hubs. That will change now that Austin is being brought down.
By these m
Bill – Just scaremongering. AA isn’t planning on flying spoke to spoke so this really isn’t an issue that I’d worry about if I were a pilot. And AA is still growing the narrowbody fleet as well, so there will be ever-expanding regional jet opportunity.
As I wrote above, if you look at slide 97 of the Investor Day presentation, American’s narrowbody fleet is scheduled to grow to 900 units from the current 839 by 2026 – 61 additional aircraft. 40% of 61 is 24 – the number of new E-175s that could be added to the regional fleet simply because of mainline narrowbody fleet growth (and that doesn’t include the 51 frame shortfall you show under its current scope allowance). But the plan shows that the regional fleet is scheduled to remain at 580 aircraft. That seems to suggest that the regional fleet will be upgauged, not enlarged.
And the other issue is where American can find more 65 seat aircraft? It looks like it’s trying to get its hands on every available used E-170 and CRJ-700 it can find. Would Embraer build new E-170s for American? American’s scope would allow 360 E-175s when its narrowbody fleet reaches 900 frames, and 400 once the number hits 1,000.
Ghost – The E70 really isn’t much different than the E75 when it comes to expense of operating. They could just do the E75LL or SC or whatever the heck they call it and put 65 seats on them. But those are all notably more expensive than the CR7, so revenues would have to be pretty great.
You’re right. But the obvious problem with the CRJ-700 is that none are being built, and the ones in service are pretty old. I agree that some variation of the E-175SC/LL/”MOUSE” (boy am I dating myself with THAT reference) a la the CRJ 550 would probably work best. OR maybe American will ultimately be content with a fleet of 400+ all 76 seat E-175s and 1000+ mainline aircraft. American only has around 180 150-seat and fewer aircraft in its fleet – and those are getting long in the tooth. Those aircraft represent only about 20% of American’s total fleet, and that percentage will only shrink with the new order. Upgaguing seems to be the name of the game.
Thanks. I should have figured that out on my own. Labor’s most tried and true strategy in collective bargaining is to agree to something one day then start complaining about it the very next day.
AA pilots might not like the scope deal they just agreed to, but what is their solution? Are they willing to propose a solution that would bring the flying to mainline? Doubtful. It’s easier to complain while they cash their big paychecks.
Delta placed the original CRJ-100 aircraft at Comair because the Delta pilots were unwilling to find a solution that would’ve brought the plane to mainline. It’s actually safe to say that pilots created the scope problem.
When Comair acquired the 50-seat CRJ 100s, Delta was only a minority owner of OH (25%). I was working at Comair as a Gate Agent when Delta bought the whole shebang in 1999. Later, we found out how well that worked out when Comair’s pilots went on strike. I moved on, believing that the end was near for Comair. It took nearly twelve more years, but sadly, I was right.
Thanks for the very interesting post! I am curious how one can get all those info about scope clauses? Is that public information?
Many thanks
It’s in the pilot contracts,so in some cases those are out there publicly, at least versions of it.
Hey Brett! Are you going to post about Jetblue/Spirit terminating their merger agreement and the recent route changes Jetblue is doing at LAX and FLL, which they should have done long ago?
Yes