In the wake of the Continental-United merger, the Continental regional affiliate Express Jet has been acquired by SkyWest, which operates United Express and Delta Connection services. Â The value of the transaction was $133 million.
SkyWest had previously acquired Atlantic Southeast Airlines, a Delta Connection and United Express carrier based in Atlanta, and will integrate the Express Jet operations into that business unit.
With increasing consolidation in the regional segment, we may get down to a handful of major players that provide services to multiple carriers. Â The trend towards consolidation at the regional level becomes interesting for the longer term, particularly as carriers such as Republic expand into trunkline service with larger aircraft.
With regional jets having moved from the 50 seat to 70 seat and now 100+ seat size category, with the 130-149 seat CSeries looming in 2013, regionals will soon be using equipment only the majors previously operated. Â Scope clauses will need to be modified to accommodate larger aircraft with regional affiliates — otherwise regionals could become independent new competitors, offering service under their own brand names.
Several regionals now have critical mass – large fleets, widespread operations and the required infrastructure to compete. Â The question now is whether the regional affiliate and code-sharing models can survive an era of aircraft size growth. Â Time, and union negotiations, may determine the future competitive environment.
