Monday, May 09, 2016

Regional Airlines Face Vexing Problems - Does Delta Connection Have Answers?

The Regional Airline Association opens its annual convention Monday with the industry facing an economic crisis reflected in a pilot shortage, but also entering a period of rejuvenation enabled by new airplanes and, perhaps, better operating performance.

The convention takes place in Charlotte, the second biggest hub for American, and also a hub that symbolizes the industry's dependence on regional partners.

American, the world's largest airline, has 10 regional partners, including three that it owns and that are known in airline-speak as "wholly owneds." At Charlotte Douglas International Airport, 370, or 56% of American's 650 daily departures, are operated by regionals.

Like most trade conventions, this will be one where vendors hawk products -- among them are the new ATR 72-600 turboprop aircraft, which will fly demonstration flights during the convention -- and where leaders discuss key industry issues. A panel discussion titled "Growing Tomorrow's Pilot Workforce" is scheduled for Wednesday.

Eric Snell, vice president of Delta Connection, which contracts with six regional airlines including wholly-owned Endeavor, told reporters recently that "pilot hiring" is the biggest problem regionals face, although he noted that a "a couple of carriers are hiring and now {offer} better contracts."

Snell also detailed Delta's efforts to upgrade its regional partners' operational performance. Operational performance has historically been a problem area for the regionals, although it has been improving -- in 2015, Skywest finished sixth among the 13 carriers ranked by the U.S. Transportation Department for on-time performance. ExpressJet was ninth and Envoy was 11th. Delta ranked third.

Snell said Delta's plan is "to take the Delta blueprint and embed it in each regional partner," while Delta CEO Ed Bastian spoke of "brand perfect" days, when not only Delta mainline but also Delta Connection complete every scheduled flight.

As of Thursday, Delta had completed 70 days with no mainline cancellations, 22 days with no Delta Connection cancellations and 18 "brand perfect" days. Meanwhile, Endeavor was on a 63-day streak of operating without a single cancellation.

Also, last month Delta became the first mainline carrier to agree to provide financing for regional carrier Republic Airways, which filed for bankruptcy protection in February, after Delta filed suit contending that Republic did not operate scheduled Delta Connection flights.

"They're a good partner for us, one of the more reliable partners," Snell said. "There's a need for good operators like them."  Delta agreed to settle the suit. 

Aviation consultant Bob Mann said the pilot shortage may be the most obvious issue confronting the regional industry, but an underlying issue is that the industry has only three buyers for its services.

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