The Struggles of the US Regional Aircraft Market Explained

US regional airlines operated around 43.54% of US flights and carried 19.42% of all enplanements in 2015. Yet, at the same time, air service to 29 cities was lost between 2013 and 2015, and the trend is continuing. How can this be, since regional aircraft operate such a large percentage of US flights and primarily link smaller airports to larger ones? The reason these communities have lost air service is primarily due to artificial constraints - airline pilot scope clauses and an increase in regulation requiring more flight hours for new pilots . In a perfect world, regional carriers would still utilize smaller turboprops and 50-seat jets to markets for which such aircraft are the right size. With business travel driving much of the demand, yields would be adequate to ensure a profit for an operator using the right equipment. But several factors have gotten in the way. One constraint is scope clauses, negotiated by pilot unions at the major airlines. These clauses restrict the number of code-sharing flights a major airline can have with regional affiliates to a given percentage of the mainline operations, and also restrict the size and weight of the aircraft that can operate under those code shares. The result, as economics are a key driver for airlines, has been an ever-increasing size in regional aircraft, offering more competitive seat-mile economics, and leaving smaller communities that might fill a 30-seat turboprop or a 50-seat jet unable to consistently fill today’s 76-seat jets that are at the pinnacle of the scope clause arrangements. A second constraint is the current artificial pilot shortage, caused by regulatory overreach by the US congress, which mandated the FAA to increase the minimum number of hours for a new airline pilot from 250 to 1,500 with no transition period. Overnight, the requirements became much more onerous, and created an artificial shortage. This perfectly suited pilots at the major airlines. A university-educated pilot coming out of a four year aviation degree program with 250 hours was typically hired by a regional airline, put through extensive on the job training, and moved up the ranks. Typically, regional captains were, within a few years, hired by major airlines as the career path went forward. Regional airlines have typically been a learning experience for pilots, rather than a career destination. But with requirements for 1,500 hours, these graduates either go to work for airlines overseas, or find jobs as flight instructors while they build time in light aircraft with experience irrelevant to what they would face in an airline environment. Rather than being trained in a disciplined system, they are left to fend for themselves as they find a way to build hours to qualify for jobs that they trained at university for. It is frustrating, counterproductive, and even the National Transportation Safety Board criticized it as reducing the level of safety. While the intent of the legislation was to ensure safety, the impacts are counter-intuitive. And since the regulations apply only to US pilots, a pilot with 250 hours could be hired by Lufthansa, and with about 400 hours be flying in the right seat of a widebody aircraft into JFK or Dulles or other US airport. If safety was the issue, logic would dictate that all operators meet the same standards. If a pilot with under 1,500 hours is safe enough for Lufthansa and the German and EU authorities, why not in the US? US pilot numbers are constrained from growth by union contracts with mainline pilots that limit both the size and number of regional jets in operation in the US by affiliates of major airlines. Without connecting flights to mainline carriers, regional airlines would find it difficult to maintain service only between secondary cities. The net result is that scope clauses in airline pilot contracts have effectively benefited urban areas at the expense of air service to rural America. Smaller cities in the US have seen a dramatic erosion of service since airline consolidation, and the situation is likely to worsen. What’s Needed Two elements could change air service for rural America and restore activity for communities that have lost air service. First, the FAA and Congress agree to change the 1,500 hour limit for graduates of four year aviation universities or programs that meet strict quality standards, and enable these graduates, who have been trained in crew coordination and other advanced topics, on the job training as first officers. There would be virtually no impact on safety, as is currently the case outside the US. Second, US airline pilots should consider enabling turboprop service to small airports not to count against the scope clause. Pilots of 19 to 30-seat turboprops aren’t going to be taking their jobs, and with a massive retirement of nearly 20,000 pilots over the next five years, replacement union members will be needed. Where will these replacements come from? The Bottom Line In a free market environment, more cities would enjoy air service with smaller aircraft if artificial constrains disappeared. Those artificial constraints, supported by ineffective regulations produce counter-intuitive results, or labor agreements that constrain airlines from maximizing their reach, impact communities, particularly in rural America. We believe compromises can be reached in both fields that would enable growth in the industry and restore much needed air service to local communities.

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