US Regional airlines face a chasm

It has never been easy to run a US regional airline. And it is getting tougher every day. Let the data illustrate this. We are showing the US DoT P6 data source; the 2023 data is through the first quarter. You will notice that salaries/benefits and materials are the key inputs. Fuel is the primary material number. Indeed, when we split operating expenses for the industry into these two key inputs, we get the following. While the industry cannot control fuel costs, they used to be able to have some control over pilot costs. But no more. Pilots argue they have been shafted repeatedly as the industry goes through its regular cycles. That is a true statement, but it is not unique to pilots. All flight crews face the same employment waves, including cabin crew. Moreover, MRO costs have been outsourced to cheaper places - often outside the US. Pilots have created a shortage in the profession by exploiting spurious data - the 1,500-hour rule being the most obvious. If this was such a safe rule, why does no other nation use it? Because it is a nonsensical number. Unfortunately, it has become a religion for US pilots. Another religious item for US pilots is the Scope Clause. It is also a blunt instrument that has only helped pilot salaries at the big three airlines. It has led to devastating economic impacts across smaller US communities that have lost air service. Do the pilots care? Not even a bit. This would be a good time to share the cost breakdown by airline to illustrate how these rules are playing out—first, fuel costs. Looking at the chart, you will see that regional airlines are benefitting from much lower fuel costs. The reason is that regionals don't buy the fuel they use when flying for a big brand airline. The big airline supplies the fuel. Has that helped regionals? Sort of. Here's the other side of what US regionals have to suffer through. US regionals are seeing exploding pilot costs. This is where the pilot shortage is felt most. Regionals are where a pilot starts his or her career. Pilots get paid more for flying larger aircraft. So, every pilot wants to jump into a regional and get promoted to a big airline ASAP. What does this mean? Regionals face a constant pilot training regime. And they can't afford it because they never get the ROI. The pilot shortage at regionals is most acute at the captain level. The aircraft can't fly without a captain because that's the rule. The pilot shortage is bad for business - all kinds of business. It is also bad for the environment. And pilots detest that argument - because, of course, they do. In their view, there is no pilot shortage. How they continue to hold this viewpoint is amazing. Fortunately, their friends in Congress are starting to see through it.

US Flight Planner - US DoT On-Time Data	Airbus vs Boeing - Official OEM Data
US Airline Schedule Performance - US DoT Data	Daily OEM Production & Deliveries -

Subscribe To Our Newsletter

Related News

Subscribe To Our Newsletter

Related News

China Eastern orders 25 A330-900

Data Confirms Wall Street’s Bullish Re-Rating

Earthquake Derails Venezuela’s Post-Maduro Aviation Recovery