United States’ Regional Airlines Purchase New Aircraft and Adjust to Changes in US Market

American Airlines, Delta Air Lines and United, together with their regional partners, have outstanding firm orders for 151 76-seat Bombardier CRJ900 and Embraer 175 aircraft, and options for an additional 177 aircraft. This does not include six E-175s that Republic Airways had taken delivery of for American as of 29 September.

The aircraft are being used largely to increase the capacity of regional fleets.

Bryan Bedford, chairman and chief executive of Indianapolis-based Republic, said in July that the carrier anticipates about 600 small regional jets being replaced by 300 larger aircraft in US fleets through 2016.

He added that he is confident that the airline would be able to keep its 50-seat fleet under contract until at least 2016.

Republic had 70 50-seaters and 157 larger regional aircraft in its fleet – not including its Frontier Airlines subsidiary – with the 47 American E-175s on order at the end of June.

Utah-based SkyWest faces a more daunting challenge. The regional carrier had 519 up-to-50-seat jets, with 343 flying for United, and 199 larger aircraft in its fleet at the end of June.

The airline’s orders for 60 “reconfirmable” E-175s– pending additional capacity purchase agreement contracts and options for another 100 of the Embraer jets – position it well to capture additional 76-seat flying.

SkyWest’s main competitors for new large regional jet contracts in the USA are Republic – where on-going contract negotiations with its pilots have forced it to sit out recent tenders – and Trans States. The remaining large regional jet operators are wholly-owned subsidiaries of mainline carriers, including American Eagle Airlines (American), Endeavor Air (Delta) and PSA Airlines (US Airways).

Regional carriers are bullish on their prospects, despite the industry’s evolution. SkyWest and Republic reported net profits of $51.2 million and $51.3 million, respectively, in 2012 – a turnaround from net losses the year before. No other independent regional carrier is publicly traded. Executives at SkyWest cite a successful cost reduction program, while executives at Republic point to the restructuring of their Chautauqua Airlines subsidiary for their respective profits.