I think the legacy airlines are finally realizing how much can be wasted in the form of vendor profits, especially now that some of them are funding the conquests of a vendor that is competing against them.
Yup.
But that's their fault though.
Not that I like it of course.
If I was Mainline A, and one of my regional contract feed vendors is now operating mainline sized craft competing directly with me - while I also provide them the ability to fly "regional" legs on the same route - I'd be a little concerned about their performance and their long term intentions.
Why should I continue to feed them cash when they could eventually eat my hand off?
But, then again, that's why one real Mainline partner won't be renewing one of their regional "partners" agreement.
Do you actually see this as a negative for the mainlines? They just found a way to replace their costly narrow body fleets. You missed thewhole point of the article. The problem will be with scope but that as we all know that has been circumvented many times in the past. At the very lest, this could mean regional style pay at the majors if they integrate this "RJ" flying. It's not good for anyone.
Republic aims to diversify its revenue sources by, in essence, becoming a competitor to other carriers, including client airlines for which it flies short hauls under contract. "I don't view us entering the branded business as competing with them," Republic CEO Bryan Bedford says. Yet with the acquisitions, Republic now operates hubs in Denver and Milwaukee and is squarely in the sights of Southwest, which is making an expansion bid in both cities. AirTran Airways (AAI) is also working to make Milwaukee a strategic focus city, complementing its base in Atlanta.
Why any mainline partner would continue to feed the dog that is trying to bite it's hand is beyond me. Sure, Bedford doesn't admit he is trying to compete with his mainline partners (be it Delta or US Airways), but on some routes they are. He may not want to admit it, but I know managers at Delta are very concerned with his operation affecting Delta's revenue streams - all while they're paying them for services on Delta's network.
Here's one example of the industry's revenue problem—and the type of fare competition the SkyWest-AirTran partnership will confront: A one-way flight early on Dec. 15 from Indianapolis to San Francisco, connecting at Chicago O'Hare, could be purchased on Dec. 3 for $78.20, including all taxes and fees. A fare that low, which includes a regional flight and is likely to attract primarily business travelers, decimates the network airline's yield for the route and is a major reason the large airlines press their regional partners so severely for cheaper flying rates.
The problem, according to many experts, is that the industry bought far too many 50-seat jets, partly because of the union scope rules that limit how large a craft nonunion pilots can fly. Given the jump in fuel costs, airlines are now striving to cull several hundred of them from the U.S. regional fleet in favor of larger, more productive models.
"What we're seeing is the end of a life cycle," says Abbey, the consultant. "Granted, it was very brief and spectacular, but it has run its course."
Perhaps Abbey isn't really that great of a consultant?
Did Abbey make the non-union statement about scope? Thought that was from the author of the article.
My comment about Abbey was that he, as KLB indicated, certainly indicated the "end" of an era, but he failed to indicate what the next era would be.
Replace them with costlier RJ fleets??
Apparently an ERJ190 is more efficient than a 717. Look for RAH to expand to other code shares with mainline. They see the future as regional providing domestic service with mainline doing int flying, looking at the trends, that's where we are going.
Exactly how all this will shake out I have no idea, and neither does anyone else.