MORE ABOUT THE REGIONALS

​Recently, I posted comments about the Regional Airlines, Scope Clauses, and new regional aircraft.  This post will provide some history for comparison purposes and specifically it will discuss aircraft that carry 50 to 76 passengers.
Of great concern is that the outlook for the regional airline market is dismal unless new regional jet aircraft are developed by the aircraft manufacturers.  The regional jet aircraft that are used today are almost exclusively made by two manufacturers, Brazil’s Embraer and Canada’s Bombardier.  This year, Embraer has entered into an agreement with Boeing wherein Boeing will buy 80% of Embraer’s regional aircraft division.  This awaits Brazilian government approval.  Also, Airbus has purchased Bombardier, meaning that any future regional jet developments will be determined by Airbus. That deal is settled and complete. At the present time, there is no publically known new regional jet of the 50 seat or the 76 seat size that is under development.  This segment is headed for extinction, which means that many cities will inevitably lose air service.
To start, it is important to understand that the airlines try very hard to match the size of their aircraft to the size of the market.  The term “market” in this sense means the city-pair of origin and destination of a specific flight or series of flights. 
For example, if the city pair is Los Angeles (LAX) and Phoenix (PHX), the potential number of seats that could be sold is large.  The result is that airlines such as Southwest operate in that market with the B737-700, with something like 17 daily flights. That aircraft has 143 seats. (Other models of the B737 have more seats.)
Another example is the city pair Los Angeles (LAX) and Reno (RNO).  That flight is operated by, among others, Compass Airlines, operating as American Eagle, using the Embraer 175, which has 76 seats.
Still another is the city pair Los Angeles (LAX) and San Luis Obispo (SBP).  This flight is operated by United Express using a Bombardier CRJ200, which has 50 seats.  There are only a handful of flights each day in this market.
I am only writing about the US domestic market here, using narrow-body aircraft.  International markets are even more complex, as they involve factors such as very large aircraft (the A380) and aircraft that have long range flight capability (the B-777ER)
The point is that markets that utilize aircraft of 50, 76, and 143 seats are quite different, one from another.  Even though the origin might be the same, such as LAX, the destination determines how big an aircraft can be used economically.  Issues such as the runway length at the destination are not normally the determinative factor.  Rather, it is the potential number of seats that can be sold, i.e., the LAX-San Luis Obispo market is much smaller than that of LAX-Phoenix.
The Legacy and major airlines operate fleets of aircraft that are only suitable in large markets such as the LAX-PHX example. They do not operate regional jets themselves.  While the 50-seat ERJ145 is still being produced by Embraer, there is no new development aircraft underway by the manufacturers to produce an entirely new 50-seat regional jet.  It appears that the airline markets that can only support these small 50-seat aircraft are on a slow march to losing service altogether.
What seems clear is only the 76-100 seat aircraft has a good outlook for the next 20+ years in terms of new aircraft now being built or designed.  But as previously discussed, the Scope Clauses have created an immediate roadblock for this market, with respect to new aircraft offerings for the 76-100 seat regional jet.
We can now ask the following questions:

• What are the regional markets that are under threat due to Scope Clause restrictions?
• What are the regional markets that are currently underserved?
• What are the cities that will be winners or losers of air service?

As discussed above, the term “market” means a pair of cities (origin and destination.) We can look at the various city populations to obtain census data.  However, what really matters is the volume of the potential airline seat sales.  As an example, Orlando FL is not a very large city at the moment, ranking only 72nd in the U.S. with a population of 280,000.  Sacramento CA, being 35th with a population of 502,000 is considerably larger. But Orlando MCO has considerably more airline flights than does Sacramento, because of Disneyland and considerable international traffic.  But Sacramento has much more air service than many cities of the same size as Sacramento.
Consider the markets such as Philadelphia (PHL)-Indianapolis (IND) or Philadelphia (PHL) – Milwaukee (MKE).  Milwaukee is the 31st largest city in the U.S. with almost 600,000 people. Philadelphia is the 6th largest city in the U.S. with 1.6 million people.  Indianapolis is the 16th largest city in the U.S. with 863,000 people.
IND is a base for FedEx and also a hub for the regional carrier Republic Airlines.  IND has many daily flights, but only two per day to Philadelphia.  MKE has more daily flights to PHL, operated by American Airlines through Republic/American Eagle, Piedmont Airlines/American Eagle.  Also, United through its affiliate Air Wisconsin/United Express and Delta, through SkyWest/Delta Connection all fly regional jets to PHL.  The American Eagle non-stops are served by the EMB145 (same as ERJ145).  United Express does not fly non-stop to and from MKE in the PHL market and they use either the ERJ145, the CRJ200, or the EMB175 in multi-stop connections. 
There are two issues here:  one, the number of daily fights in the above two markets involving Philadelphia are relatively few.  Second, the regional jet aircraft currently in use in these two markets are both too small (both the ERJ145 and the CRJ200) and getting long–in-the-tooth, meaning that they are likely on their final years of service in this market.
The only new regional jets that are being developed, such as the Embraer E175 E2 and the Airbus A200-100, will not be usable under the current schedules in these two markets (and many others) as just explained.  In fact, unless the Scope Clauses get amended, the regionals are heading for a cliff.  Importantly, the aircraft manufacturers that will design and build new regional jets have been reduced to just Boeing and Airbus, although Japan’s Mitsubishi and China are trying to get into the regional jet market.  Still, there is no manufacturer that is working on a replacement for the ERJ145 and the CRJ200.

​The above image shows the ERJ145 in United Nations livery.