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July 14, 2024
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SkyWest Airlines, based in Utah, started the business in June 1972.  Today its fleet count has grown large enough to rival the fleet size of the US majors, even though it is a regional airline.  This is a rather remarkable achievement

In terms of fleet size, the most recent information indicates it has 417 aircraft in service.  To provide some perspective, this places SkyWest at about the same size by fleet number as China Eastern, which is listed at #7 worldwide.  SkyWest is, in a word, enormous.

What does it mean to have a regional so big?  It certainly means the airline is treated by suppliers like no other regional.  Even though SkyWest, as a regional, negotiates contracts with other majors (Alaska, Delta, and United) it can do so more as an equal than any other regional.  SkyWest may be too big to bully.

The following chart demonstrates how the airline has grown, quietly and organically.  SkyWest is Bombardier’s largest customer.  It is quickly also becoming the most important customer for Embraer.  Embraer’s best-selling model is the E175, and SkyWest is the biggest customer for it.

What does this tell us about the airline?  It is not only an increasingly equal to its major customers, it is also highly influential among the regional jet OEMs.  Although the airline has shown no interest in flying under its own brand, it could as it has the critical mass.

Among regional jet OEMs, this airline is the single most influential airline there is.  It can make or break the few OEMs in the business.  For example, it is the largest customer for the Mitsubishi MRJ. But US scope clause prevents that aircraft from flying in regional service in the US.  In placing the order, SkyWest gave the MRJ the endorsement it desperately needed.

It is reasonably clear that scope clause will not move anytime soon, certainly not before 2020 at the earliest.  SkyWest has stuck with its MRJ order.  What are its plans for the MRJ?  No word from the airline.  But if it does take delivery, the MRJ could form the core of a fleet SkyWest flies under its own brand and does not serve as a regional feeder operation.  This is speculative on our part of course.  But were this idea to catch on, SkyWest could become a highly disruptive force within the industry.  There is no other regional that has the heft to pull this off.  (Republic’s C Series order still leaves many wondering).  SkyWest understands the regional markets as well as any airline and could, therefore, identify the markets best placed to exploit a new generation aircraft like the MRJ.  Such a move could serve to break open the consolidated US airline industry.

Aside from market forces, SkyWest is the airline that will decide the future of the regional jet business in the United States, and since this market accounts for over 70% of the global regional jet business, for the rest of the world too.  SkyWest is a uniquely powerful airline.  What Emirates is to the A380, SkyWest is to the regional jet OEMs.

In the meantime, SkyWest is taking deliveries of E175s for United, Delta and to satisfy the needs of new customer Alaska Airlines.  SkyWest’s success has started to worry Alaska’ subsidiary Horizon.  On the other hand Delta, for example, wants to up-gauge where they can.   The pending arrival of the CS100 at Delta probably means that the CRJ900 will move out of New York, and be redeployed.  While other regionals serving Delta should be concerned, SkyWest does not need to be as concerned.

Bombardier and SkyWest are continually in discussions, as well as since the early CRJ impairment announced late last year.  The CRJ900 remains an asset the airline can use as it fits within scope clause and may be the lowest cost regional jet.

SkyWest is an airline that gets little attention compared to the majors.  Which may suit the quiet operator out of Utah.  But do not mistake or discount its influence.

author avatar
Addison Schonland
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.

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