The end of Mesa has finally arrived, and lucky for the airline, it was the rosier situation that prevailed. Instead of failing outright, Mesa has now been bought. No doubt many a United customer is now celebrating this turn of events. Republic is the winner, and that means that outside of wholly-owned regionals, there are really only two major regional carriers of note left: SkyWest and Republic. That leaves just one more smaller airline’s fate to be determined: GoJet.
Republic flies (or will, after deliveries) around 250 Embraer 170/175 aircraft for American, Delta, and United. Mesa is now down to flying a mere 60 Embraer 175s which are owned by United. Despite Republic operating about 80 percent of the total fleet, Republic will own at least 88 percent of the combined company. Mesa can get to 12 percent at best, but it may be as low as 6 percent. As part of this deal, Republic will pay off all Mesa’s debts. (At least it’ll pay the monetary ones. There are probably spiritual debts which can never be redeemed.)
United has helped make this happen by signing a new 10-year agreement to have the new Republic fly those Embraer 175s for the airline. This had to have been a requirement for Republic to even consider any sort of merger.
Will this get approved by the feds? Consider this bit of a shadiness… Republic CEO Bryan Bedford is the current nominee to head the Federal Aviation Administration (FAA). You think his boss at Department or Transportation (DOT) or friends at Department of Justice (DOJ) are going to stop this? I can’t imagine that happening. Besides, there isn’t much objectionable here anyway.
What this means is that SkyWest and Republic are left standing as the only independent regional airlines of consequence. And to illustrate this, we can look at the evolution of the regional partners of the big three US airlines.
American Eagle Regionals
Let’s start with American which arguably has the most complicated situation. Here is a look at monthly departures by regional carrier for American, including US Airways and America West:
Data via Cirium
There have been so many airlines flying for American over the years, it is exceedingly hard to keep track. Mesa was kicked to the curb a couple years ago, but Air Wisconsin has just finished flying for the airline. That means this has gotten much less complex. There are the three wholly-owned subsidiaries:
- Envoy flying Embraer family 65-76 seaters primarily out of Chicago/O’Hare, Dallas/Fort Worth, Miami, and Phoenix
- Piedmont flying Embraer 50-seaters primarily out of Charlotte and Philadelphia
- PSA flying CRJ family 65-76 seaters primarily out of Philadelphia and Washington/National
In addition, there are the two independents:
- Republic flying Embraer family 65-76 seaters primarily out of Chicago/O’Hare, the New York airports, and Washington/National
- SkyWest flying CRJ and Embraer family 65-76 seaters primarily out of Chicago/O’Hare, Dallas/Fort Worth, Los Angeles, and Phoenix
If there is any more work to be done here, it’s only for American to consider consolidating any of its wholly-owneds into a single airline. But that may not really be necessary.
Delta Connection Regionals
Next up, we have Delta. Delta was the first to rationalize its regional partners, and really, it was never quite as complex anyway, especially before Northwest came in. Here’s a look at Delta’s journey.
Data via Cirium
Today, Delta has its one wholly-owned regional:
- Endeavor flying CRJ family 70-76 seaters primarily out of Atlanta, Detroit, Minneapolis/St Paul, and the New York airports
It then has the same two independents as American chugging away doing the work elsewhere:
- Republic flying Embraer family 70-76 seaters primarily out of Boston and the New York airports
- SkyWest flying CRJ and Embraer family 70-76 seaters primarily out of Detroit, Los Angeles, Minneapolis/St Paul, Salt Lake City, and Seattle
Delta has no more work to do here regarding consolidation.
United Express Regionals
Lastly, we come to United. I said American’s structure was complex, but United hasn’t been much better. It is now, however, finally getting into a more sensible place.
Data via Cirium
At United, there are no wholly-owned subsidiaries, because it’s not allowed per the pilot deal. Instead, there is one minority-owned partner:
- CommuteAir flying Embraer 50-seaters primarily out of Houston/Intercontinental and Washington/Dulles
Then there are three independents:
- GoJet flying CRJ-550s primarily out of Chicago/O’Hare and Newark
- Republic flying Embraer family 70-76 seaters primarily out of Chicago/O’Hare, Newark, and Washington/Dulles, but now with Mesa it will double its presence at Dulles and add a Houston/Intercontinental base
- SkyWest flying CRJ and Embraer family 70-76 seaters primarily out of Chicago/O’Hare, Denver, Houston/Intercontinental, Los Angeles, and San Francisco
United is now down to four carriers, but there is probably one too many. GoJet is the remains of the old Trans States. It has a small niche, and it is really just waiting for something to happen. It would fit with SkyWest in the sense that it flies CRJ-550s, but its network is more oriented toward Republic’s part of the country.
The divide is pretty remarkable. SkyWest is a western and central airline while Republic is very much an eastern one.
Data via Cirium
There’s no question that SkyWest is the clear market leader, but Republic has long been a number two. It always had an ace — it holds a lot of those slots at congested northeast airports itself, so the big airlines weren’t ever going to walk away. But now, it’s clear that Republic and Mesa together cement the airline’s position even further.
One thing that you can see in all of those charts is that the number of regional flights are declining. As regional wages rise and shrink the advantage of outsourcing to them, the big airlines have rethought how to serve smaller markets. We have basically reached a steady state in the regional industry with just that one deal left to be done.
