North American Regional Airline Industry in Transition MITRE Corporation Center for Advanced Aviation System Development February 14, 2011
Regional Airline Association (RAA) and RAA Members Safe. Professional. Reliable. RAA Founded in 1975, Washington, DC-based trade association Represents 29 member airlines (Canada, Mexico, U.S.) and 180 associate member suppliers Provides a wide array of educational, technical, government relations and public relations services Regional Airlines Critical Transportation Role Provide the only scheduled passenger service to 496 of 653 (74%) communities with commercial service Fly more than half (52%) of the scheduled flights Serve more than 159 million passengers in 2009 (161 million projected for 2010) Employ 52,000 airline professionals
Let s talk about Regional Airlines - Then and Now What is a Regional Airline Fleet Transition Airline Networks Financial Trends Safety Leadership Rulemaking/Studies Mergers and Consolidation Opportunities
Regional Airlines Then Safe. Professional. Reliable. 1980
1978 Airline Deregulation Act Predicting the Critical Role of Regional Airlines If deregulation is to succeed, it will take the commuters to do it Commuter airlines will play an increasing role in connecting main street to the business world and are making a great contribution to our country. Harding Lawrence Braniff International Speaking at a Commuter Airline Association of America meeting in 1979
Mainline Carrier Regional Bra n d Operating Partners Alaska Airlines N/A Horizon Air Peninsula Airways Mainline Carrier Regional Bra n d Operating Partners Safe. Professional. Reliable. Frontier Airlines N/A Great Lakes Lynx Aviation Republic Airlines jetblue Airways N/A Cape Air AirTran Airways N/A Skywest Airlines Now American Airlines American Ea gle Network Partnerships, American Conne ct ion New Role, Safe, Professional, Reliable 2010 Co nt inental Airlines Continental Exp re ss Contin e nt al Conne ct ion American Eagle American Eagle/ Exe cu t ive Chautauqu a Airlines Chautauqu a Airlines Exp ressje t Cape Air Colgan Air Midwest Airlines United Airlines Midwest Co n n e ct United Expre ss Chautauqua Airlines Republic Airlines* Frontier Airlines Atlantic So ut heast Colgan Air ExpressJet Airlines GoJet Airlines Great Lakes Co m m u t Air Mesa Airlines Gulfstream Intern ational Airlines Shuttle America SkyWest Airlin es Trans St ates Airlines Delt a Air Lines N/A Atlant ic Southeast Airlines Chautauqu a Airlines Co m a ir Compass Airlines Mesaba Airlines Pinnacle Airlin es Shuttle America US Airways US Airways Expre ss Air Wisconsin Chautauqua Airlines Colgan Air Mesa Airlines Piedm ont PSA Republic Airlines SkyWest Airlines Trans St ates Airlines *Flights are outsourced Source: OAG Schedules, July 2010
What is a Regional Airline (in North America) Safe. Professional. Reliable. One Primary Role Connects small and medium communities with economic and transportation centers 99% of flying conducted in code share network One Level of Safety Operates under F.A.R. 121 Maintains mature, comprehensive training programs Maintains experienced pilot workforce 18,000 pilots Captains avg. > 10 yrs. & 8,000 flight hours First Officers avg. > 5 yrs. & 3500 hours TT (avg. age 32) Embraces voluntary safety programs Engages in sharing of safety practices (with other air carriers) Operates a modern fleet (with up to 86 passenger seats)
General Business Arrangements and Regulatory Responsibility Relationships with Networks Vary Widely Contract and ownership Capacity Purchase Agreements Shared livery, reservations, marketing, ground handling, etc. Single carrier may have multiple relationships Each Carrier s Relationship with FAA Includes Operating certificates, Ops Specs, Part 119 officers CMO principals Manual system, procedures and training 8
Fleet in Transition: Meeting Needs of Communities and Network Partners Regional jet (RJ) performance increased route options communities Loosened scope enable network carriers to fill the seating gap and to continued ASMs growth without increased burden on ATC Airframes in 2000 Airframes in 2009
Stable Frequency of Departures Operations RJs Continue to Grow Monthly Scheduled Passenger Departures by Category (U.S. Carriers) Airlines Reporting April 2003 April 2004 April 2005 April 2006 April 2007 April 2008 April 2009 April 2010 Turboprop Departures 140,737 125,782 108,799 100,508 100,717 93,615 82,226 72,342 RJ Departures 189,719 232,600 276,124 264,266 271,767 280,918 264,985 271,223 Total Regional Departures 330,456 358,382 384,923 364,774 372,484 374,533 347,211 343,565 * Domestic US Departures Only ** Fleet data is as of April 1 of each year Source: OAG Schedules inet,, OAG Fleet inet As of April 13, 2010
Category Turboprops (includes Q400s) Q400s Small RJs (50 seats &under) Large RJs (51-100 seats) Total Turboprops & Jets Stable Total Fleet Trend Towards Longer Flight Segments Increasing 373 72 1,777 566 74 1,866 770 80 1,920 1,007 109 2,034 1,233 171 2,228 1,362 279 2,351 1,322 344 2,318 Safe. Professional. Reliable. Scope includes Jets ( RJs ) & Turboprops (TPs) with 19 to 100 pax seats 2285 total airframes (446 TPs, 1224 1st gen RJs, 615 2nd gen RJs) April 2000 1,332 0 April 2001 1,226 4 April 2002 1,070 15 April 2003 918 15 * Domestic US Departures Only ** Fleet data is as of April 1 of each year Source: OAG Schedules inet,, OAG Fleet inet,, April 13, 2010 April 2004 824 18 April 2005 710 19 April 2006 652 21 April 2007 605 25 1,356 372 2,333 April 2008 563 49 1,342 484 2,389 April 2009 467 61 1,240 578 2,285 April 2010 446 65 1,224 615 2,285
Modern Fleet Safe. Professional. Reliable.
Air Carriers In Transition Largest 20 airlines fly 99% of regional passengers Not your father s regional airlines 2010 Passengers Enplaned percent of total regional traffic activity
Networks The System we have developed to take passengers anywhere in the world Safe. Professional. Reliable. Santa Fe Santa Fe Dallas American Eagle Flight 2850 ERJ140...connecting Dallas Buenos Aires American Airlines Flight 997 Boeing 777 Dallas Buenos Aires
The System we have developed: one ticket to take passengers anywhere in the world Appleton Chicago O Hare United Express ExpressJet Flight 5877 ERJ145...connecting Chicago O Hare Beijing American Airlines Flight 187 Boeing 777 Appleton Chicago Santa Fe Beijing Dallas Santa Fe Dallas American Eagle Flight 2850 ERJ140...connecting Dallas Buenos Aires American Airlines Flight 997 Boeing 777 Buenos Aires
US Airports Served Exclusively by Regional Airlines Safe. Professional. Reliable.
Regional Airline International Service Has Grown Dramatically (as of July 2010) North Transborder Routes South Transborder Routes
Hub feed critical to air transportation system: Percentage of Regional Operations at 10 busiest US airports Atlanta 39% Chicago O Hare 60% Denver 45% Dallas/Ft. Worth 37% Los Angeles 25% Houston 57% Charlotte 57% Detroit 61% Philadelphia 54% Minneapolis 54%
inancial Trends 010: Recovery of Business Travel The worldwide economic recession caused an unprecedented drop in business travel Premium-fare travel collapsed in 2009, off by more than 30%, but recovered gradually through 2010 This represents passengers traveling in first and business class Yields are up but domestic business travel in the U.S. is still down from the pre-recession peak The problem: business travelers contribute the highest margins for the airlines The opportunity: continuing recovery of the economy can boost both business and leisure travel from current levels
egional Airline Industry Growth 1980-2009 Average Passenger Trip Length miles 475 450 425 400 375 350 325 300 275 250 225 200 175 150 125 100 75 50 25 0 Revenue Passenger Miles billions 80 70 60 50 40 30 20 10 129 174 194 217 296 442 457 1980 1985 1990 1995 2000 2005 2009 12.64 24.38 67.41 72.91 Average Seating Capacity 60 50 40 30 20 10 0 Passengers m illions 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 16 26 26.99 24 41.49 30 1980 1985 1990 1995 2000 2005 2009 58.31 37 82.49 50 152.55 55 159.45
ajor Airline TD Revenues Are Up Sharply he major airlines added a combined $12.8 Billion of operating venues in the first three quarters of 2010 h e N e w U n i t e d i s s l i g h t l y l a r g e r t h a n D e l t a w o r l The New United is slightly larger than Delta worldwide and slightly smaller in the U.S.
gional Airline Capacity Purchase Agreements (CPA) d to Stable Regional Carrier Revenues 4 Billion in 1H 2010 versus $5.19 Billion 1H 2009 G Form 41 inet, Airline Reports
ajor Airline et Profits Have Rebound Considerably $2.8 Billion Net Loss Improved to a $2.6 Billion Net Profit
ajor Airline System Capacity December ASMs CO/US, FL/WN and DL/NW are merged in December 2010 schedules. Regional ASMs are excluded from Mainline ASMs.
egional Airline System Capacity December ASMs * Trans States includes Compass; US Airways includes PSA and Piedmont; SkyWest includes ExpressJet.
egional Airline Safety Leadership nap Shot of Structured Safety Systems Objectives Continual monitoring, analysis, self-directed & industry-influenced improvements Structured Safety Systems ATP Training/Checking Standards Internal Evaluation Program (IEP) Flight Operational Quality Assurance (FOQA) Aviation Safety Action Program (ASAP) Aviation Safety Information Analysis and Sharing (ASIAS) Line Operation Safety Audit (LOSA) IATA Operational Safety Audit (IOSA) Advanced Qualification Program (AQP) Voluntary Disclosure Reporting Program (VDRP) Air Transportation Oversight System (ATOS) Code Sharing Safety Alliances
egional Airline Safety Leadership ommitments to Voluntary Safety Programs - RAA Members ASAP FOQA ASIAS DOD VDRP IEP LOSA AQP 100% 98% 93% 99% 100% 99% 81% 85% Percent of regional airline pax flying on airlines with voluntary safety programs (active/pending approval). RAA members only. Oct.2010
egional Airline Safety Leadership haring Information and Collaboration Safe. Professional. Reliable. RAA Safety Leadership Initiatives Safety efforts Industry AQP Work Group FAA-Industry Stall/Stick Pusher Work Group (co-chair) First Officer qualifications ARC (chair) RAA Fatigue Study (pilot workload fatigue)
egional Airline Safety Leadership haring Information and Collaboration Code Sharing Alliances Code Sharing Safety Alliances (100% participation) Safety Data (through ASIAS participation) Delta Training Alliance Association Networks RAA standing committees (Safety Council, ROC, Training Committee, Flight Technology Committee, etc.) Associations (ATA, ALPA, etc.) Common Safety Audit Standards FAA, DoD, IOSA/Code Share Code-share Best Safety Practices Sharing Delta Connection Safety Alliance United Express Safety Leadership Team
urrent Rulemaking/Studies of December 2010 AA Rulemaking Pilot Flight & Duty Time Limits First Officer Qualifications Safety Management Systems Crewmember & Dispatcher Training RC Activities Pilot mentoring/ professionalism Pilot training Safety and training best practices NTSB recommendations Pilots records Congressional studies DOT IG Regional pilot training Code sharing GAO Regional safety/training Pilot commuting TRB/NRC/FAA Commuting study FAA rulemaking
dustry in Transition: ajor Airline Mergers and Consolidation Safe. Professional. Reliable. Four mega-carriers are left after DL-NW and UA-CO mergers United, Delta, American and US Airways contract for most of the operations by RAA member carriers Outside the Big 4 Alaska Airlines Group (Alaska and Horizon) has more limited geographic scope Southwest Airlines has entered major markets and will accelerate growth with the acquisition of AirTran
egional Airline Mergers and Consolidation Consolidations Republic Airways Holdings acquired Frontier and Midwest Pinnacle acquired Mesaba Trans States Holdings acquired Compass SkyWest, Inc. acquired ExpressJet AMR would like to divest American Eagle Network carriers right sizing aircraft equipment Scope clause restrictions loosed by economic necessity and leverage Aircraft economics increasing value of higher capacity aircraft (70 to 90 passenger seat jets/tp) Reducing 50-seat regional jet fleet
Opportunities Safe. Professional. Reliable.
atigue eading Fatigue Science Efforts Push for New Science-based Rules FAA Aviation Rulemaking Committee Lessons Learned Limited research and knowledge available except ULR No training material to comply with new rule Expensive FRMS development costs ($250K for each airline program) Solutions Fill science gap with research into work load (cycles) fatigue Develop fatigue training program
eading Fatigue Science Efforts RAA Sponsored Fatigue Study Collaboration with Washington State Univ. Three Phase Study Create new prediction modeling analytic tool Use model to compare with safe long-haul flight with multisegment flight Supports FRMS development Enables us to Develop new science Respond to propose flight/ duty/ rest rules Improve training and awareness Enable better decisions as pilots and managers Fulfill our Congressional commitment
extgen egional Airline Perspective Safe. Professional. Reliable. Current Aircraft Capabilities Glass cockpit, GPS, digital ACARS, terminal/enroute RNP and RNAV Is There Reason to be Skeptical about NextGen Existing CNS capabilities significant but underutilized False starts and slow progress Aircraft Equipage Challenges Air carrier benefits and business case Retrofit option impractical Best Equipped, Best Served Is it a viable incentive? Should Congress incentivize equipage? Persistent Challenges Continued reliance on legacy infrastructure (radar, ILS) Uncertain business case for air carriers Inconsistent political support and funding
entoring uestions Concerning Pilot Experience Safe. Professional. Reliable. Previous Activities First generation provided pilot-to-pilot support Trade Association information sharing FAA InfoShare (FOQA and ASAP information) Renewed Efforts Code sharing safety alliances and pilot training A Need for pilot/pilot organization involvement
ilot Sourcing here will Future Pilots Come From Safe. Professional. Reliable. Traditional sources Fewer military pilots Changing demographics Value of Structured Training H.R. 5900 (ATP, 1500 flt. Hrs., academic system) Will there be a Pilot Shortage? Flight academies have little additional bandwidth Ab initio and Multi-crew Pilot License (MPL) are quality by not quantity solutions
cott Foose egional Airline Association oose@raa.org 02-367-1212 Safe. Professional. Reliable.