regional consolidation?

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pilotlight

Well-Known Member
Does anyone else think that there will be consolidation amoungst the regionals in the next year? I don't know how or what but i think it could involve the big players like skywest/asa, republic, pinnacle/colgan.
 
pilotlight said:
Does anyone else think that there will be consolidation amoungst the regionals in the next year? I don't know how or what but i think it could involve the big players like skywest/asa, republic, pinnacle/colgan.
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The competition is different compared to majors. The whole point is to undercut the next guy, because you are flying your major partners routes. Rather than merging, I think there will be buyouts but they'll keep the companies separate to introduce a whipsaw factor. Skywest/ASA Colgan/Pinnacle are a few examples. One thing's for sure though, all this merging at the Major level will not be good for regionals, pilot screwage is about to come. Someone is going to have to shrink.
 
jtrain609 said:
No.

There is no business reason nor financial incentive for regional consolidation.
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There is, for the regional airlines. Obviously. There has been consolidation in the past, and there will be more in the future as companies become ailing and then become cheap and desirable acquisitions. I don't think there will be two healthy or semi-healthy companies merging, but there will be acquisitions as there have been in the past.
 
If the new regulations/laws being proposed go as far as we hope they will, shorter duty times, duty times based on type of flying done, higher minimums for employment, more extensive training and so on, would it become beneficial for majors to bring the regional flying back in house?

There is not much more fat that can be trimmed from a regional operation, unless pilots really start to fly for free. How close to the break even point regarding outsourcing for Majors do regionals operate?

Or is a more likely scenario that regionals will shrink back to their former selves, operating smaller aircraft on shorter routes instead of longer flights they are operating now with the RJ's?
 
I believe and these are only my own thoughts - that pinnacle will be a part of some sort of transaction by the end of the year.
 
Matt13C said:
If the new regulations/laws being proposed go as far as we hope they will, shorter duty times, duty times based on type of flying done, higher minimums for employment, more extensive training and so on, would it become beneficial for majors to bring the regional flying back in house?
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Maybe, maybe not. Depends on the costs associated with it. As of right now, unless they put some ungodly requirements in there, I think there's enough applicants out there to at least keep the regionals going for about a year or so even if they up the mins to 1500TT. After that time's up.....it's a crap shoot.

Or is a more likely scenario that regionals will shrink back to their former selves, operating smaller aircraft on shorter routes instead of longer flights they are operating now with the RJ's?
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This is already Delta's plan, actually. They want RJs flying short hops and (sorry XJ guys, 'cause this SUCKS) as a turboprop replacement.


pilotlight said:
I believe and these are only my own thoughts - that pinnacle will be a part of some sort of transaction by the end of the year.
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It's possible. Paying off a majority of debt, long term contract that don't expire for another 7 years and a low overhead with zero training costs on the pilot side right now? Could be.
 
kellwolf said:
This is already Delta's plan, actually. They want RJs flying short hops and (sorry XJ guys, 'cause this SUCKS) as a turboprop replacement.
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Really? Aren't TProps more efficient down low, where you are likely to stay on short hops?

I obviously have no clue how airlines work or how they think being a private pilot, but that doesnt make much sense to me. Unless of course a short hop to them is PHL-MCO.
 
Matt13C said:
Really? Aren't TProps more efficient down low, where you are likely to stay on short hops?
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It's not about saving money, it's about customer perception. It would have been much more cost efficient to keep the ATRs at ASA, but they're gone. We start service from MEM on the -200 to Golden Triangle Regional airport next month. It's an airport in the middle of nowhere who's only reason for existing is Mississippi State.

I obviously have no clue how airlines work or how they think being a private pilot, but that doesnt make much sense to me. Unless of course a short hop to them is PHL-MCO.
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We're doing CVG-IAH and used to do BOS-MEM. The world "regional" appears to be relative.....
 
kellwolf said:
We start service from MEM on the -200 to Golden Triangle Regional airport next month. It's an airport in the middle of nowhere who's only reason for existing is Mississippi State.
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It also serves Columbus AFB, where the finest military pilots in the world were/are created. :D
 
kellwolf said:
We're doing CVG-IAH and used to do BOS-MEM. The world "regional" appears to be relative.....
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We did that run at SKW last year. That's the only time I've actually been home during a trip and my wife was actually out of town on business!! :)
 
It's an interesting idea.

At a high level, consolidating a couple of regionals reduces the number of players for outsourced flying. Theoretically, it reduces the purchasing power of the buyers and allows the regionals to charge a little more.

Theoretically, of couse.
 
jynxyjoe said:
We've got some of the BOS-MEM stuff now. Be in BOS tomorrow actually.
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When I saw we lost BOS and DEN, I didn't shed one tear over that. You guys can HAVE that. I think Compass used to do the BOS-MEM, but -900, -175. Tomato, tomAHto. :) Stonger than anticipated headwinds one day doing BOS-MEM, and we were running number to see if we were gonna have to stop in BNA for gas.
 
The problem with commuter consolidation is it doesn't take much money to get into the game. If Skywest and Republic were the only players a new company could easily start up, it's basically turn key. Sign a contract, lease some planes, and hire some pilots. I bet you could be up and operating in under 12 months if you've got people on your team with previous 121 experience and a direct line to the FAA.

Raise the financing or get private investors, then do an IPO to let the shareholders assume all the risk and cash out and get your money back.

Startups are easy to attract low cost labor to - for examples look at Lynx, Freedom's Delta flying (technically not a startup but it kinda was), Skybus, Virgin American, etc. And at this point in time not only are there a lot of experienced folks on the market but there are a lot of experienced folks that would leave to get a CA slot.

In fact I bet you could line up a decent amount of pilots at a flat pay rate of $60/hr for CA and $30/hr for FO's with no longevity raises and fend off the unions for at least a few years.
 
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