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March 29, 2024
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Less discussed, so far, in terms of follow on impact of Delta’s decision to select the CS100 is its impact on the US regional airline market.  Any discussion on the US regional airline market brings up the scope clause issue.  This week the RAA has its annual conference, and we are certain this issue will be discussed again.

Except, this time the discussions should be a lot more nervous.  We think Delta’s decision is one that pilots should take careful notice of.   The airline stated the selection of the CS100 impacts aircraft from 76 seats and up.  With the CS100 starting at the regional aircraft level, what the airline is effectively saying is that its mainline pilots will now do the some of the flying that potentially could have been undertaken by regional partners.  Delta mainline pilots must be very pleased.  Scope clause has worked for them, bringing in more work that might have been done by regional pilots at lower pay scales.

But this could impact regional airlines in a negative way.  Regional airlines are already under pressure as mainline carriers negotiate them down to bare bones.  Which is why typical US regional air service is, to be charitable, unpleasant.  The idea of being able to fly a larger aircraft, with the widest economy seats in all airline service, is a fantasy few dare to dream of.  The CS100 offers an 18.5 inch wide seat!  That compares to interrogation room standards one finds elsewhere.

Pilots at United and American must be watching the move at Delta with glee.  Since the US airlines inevitably follow each other with respect to pilot contacts, Delta’s move is highly likely to be copied.  No US airline wants to get into a labor fight now – there’s plenty of money to share, provided competition stays rational in terms of capacity growth and pricing.  Which means, low capacity growth and keeping fares as high as the market will bear.  In other words no big up gauging and price wars.   Mainline pilots are seeing a more stable career with profit sharing and better pay.  Happy days for mainline pilots.

We therefore see scope clauses staying exactly where they are.  This means tougher times for the makers of certain regional aircraft of course.  Take a look at the table.

2016-05-06_8-22-43* MRJ90 payload estimated

For US regional airlines constrained by the scope clause the market is a choice of two – the CRJ900 and E-175.  The other aircraft are too heavy to fit within current scope.  Which is bad news for the MRJ90, which is getting even heavier.  Embraer, wisely, has decided to develop it E-175E2 last in its E2 process.  Time might see the scope move to allow the E2, meanwhile Embraer will keep building and selling the current E-175.  Bombardier is under no critical pressure on the CRJ, but the aircraft might benefit from refresh in terms of engines. The CRJ900 had a cabin refresh announced at RRA yesterday.

Since Delta has moved their mainline pilots all the way down to 76 seats, has the entire regional discussion changed?  Perhaps the big US network airlines will simply not need to worry about scope anymore.  Which could mean the future could see the MRJ90 and E-175E2, unconstrained by scope, in the hands of mainline pilots.  This is not good news for the CRJ program, but might be good news for CSeries. Delta’s decision really does carry weight and we have not yet seen how their decision will impact the industry.  This is going to be interesting to watch.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

5 thoughts on “Delta’s CS100 selection – regional impact

  1. I guess the main driver of all this is the scarcity of pilots.

    I dont believe we’ll see 76 seaters flown by mainline pilots very soon, still. The pressure will be (again) below 76 seats, and we’ll an even faster disapperance of CRJ 100/200/700s, ERJs and E170s.

  2. I think there’s potential for scope clauses to upgauge slightly, but only if pay increases. The 50 seat to 76 seat transition is old news. But many routes have had 76 seaters for a long time, and some of those are presumably in a position where they could be upgauged without significant reductions in frequency. I expect Delta will capture some of that with the CS100, but that’s a big step up compared to a CRJ-1000, E190, or MRJ90. The ideal transition would have some of these 90 seaters in the regional mix.

    I’m sure the majors want that, but what the pilots don’t realize is that they should want it, too. From what data I’ve seen, the entry level regional payscales are genuinely pathetic. The jump to mainline is huge. Offering increased regional scope clauses in exchange for better payscale guarantees in the regional contracts should be, in my opinion, one of the top priorities of the pilots unions. This does four things:

    1.) Creates the opportunity to lock in livable wages for entry level pilots rising through the regionals. The mainline pilots need to keep in mind how much their first years sucked and advocate for ending that for future pilots.
    2.) Provides the regional airlines more stability. They would, of course, jump at the chance to fly larger aircraft, and would accept paying higher wages as long as they know their contracts cover those costs.
    3.) Allows the majors to continue contracting out the shorter routes to lower cost regional operators. The cost advantages won’t be as high as a lot of the current contracts enable, but on routes that need the seats, I guarantee it’s cheaper to pay $40k/year to first officers flying 90 seaters than it is to pay them $25k flying less efficient 76 seaters at higher frequencies, or to pay them $75k flying CS100’s on routes that can only fill 2/3 the seats.
    4.) Helps ensure a viable future supply of pilots, instead of scaring away competent candidates who can get higher pay in other industries with less hassle.

    The potential for downgauging some mainline to regional is real, but outweighed by the upsides. The incentive to do so is also reduced by more sane payscales in the regionals.

  3. Time has come for a revision to Scope Clause : Sc3 is the already existing Scope Clause, but with the treshold moved from 76 seats to 126 seats. Below that, define two new intermediate Sc2 and Sc1 setting salary levels and related work conditions applicable in Commuter Airlines from respectively 101 seats to 125 seats, and from 76 seats to 100 seats. Below 75 seats, free employment terms and conditions. This will regulate Pilot employment terms in Commuter Airlines, so that younger pilots also have a career perspective, without necessarily any need to resorting to the radical “quit and move to Mainline” rupture causing the current pilot shortage with Regional airlines. As iamlucky13 says, such an expanded Scope Clause is in the interest of the Pilot population throughout, Mainline and Regionals and it is sustainable, as larger aircraft applied in commuter service will enable better salaries for commuter pilots, being more efficient economically …

  4. IMHO it is not that the CS100 is gonna be replacing RJs directly. The fact is, there are gonna be more direct flights bypassing the hub and spoke system where possible with the CS100. I am also quite mystified why the CRJ1000 has been such a poor seller. Surely it would be possible to fly it mainline with 24 extra seats in some places?

  5. The E175e2 will never fly at the majors due management will always feel operating costs will be too high (can you say 737 payscale?) which the pilots and management will never agree on. As for it flying at regional levels, scope will never be loosened, and the mainline pilots, many of whom are either ex-military or young guys and girls who never suffered through the crappy days of the nineties or early 2000s flying turboprops for laughable pay, don’t give a bleep about regional pilots and wish regionals only flew turboprops, with the pay to match. Like the CRJ1000, the E2 will never fly on the US

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