Insight – Implications of rising CRJ Op costs

Every reader is aware of the pressures US regional airlines are under.  An aspect that warrants more attention is the fleet situation. The former Bombardier CRJ is now a Mitsubishi product.  Mitsubishi, through its MHIRJ

organization, is supporting this fleet and investing in MRO facilities to achieve this.  Even so, CRJ Op costs are starting to climb. 

The only new build regional jet is the Embraer E-175. This places regional airlines in an ever-growing cost bind.  The CRJ is costing more to operate and the “natural” replacement is essentially a monopoly with little incentive to price sharply.  Through in much better pilot salaries at regionals and you have wafer thin margins getting thinner.

In previous analyses, we have shown that for the big airlines, pilot and fuel costs account for about 75% of operating costs.  US regionals get their fuel through mainline partners.  This is clearly a big benefit, but as the next chart shows, pilots now are at about 50% of operating costs.  As the new higher salaries kick in, this is going to rise.