THE LIFE CYCLE OF THE SMALL REGIONAL JET
Just like the small RJ was a game changer in the early stages of its growth cycle – it is fast becoming a story in the later stages of its life cycle. Another month of analysis on today's use of the small regional jet (RJ) is on our website. The small RJ has had many missions and strategies over the last 3 decades - not all obvious.
2022 marks the 30th year when the small RJ has been deployed inside the networks of the Big 3. In 1993 Comair, a DL regional partner, began deploying the aircraft from its CVG hub. By the end of the decade, the industry was deploying the aircraft type to 159 airports serving 354 city pairs. The trend line would continue.
During the 90s the world learned about scope clauses that could be found at the front of mainline pilot collective bargaining agreements. Simply, scope language defines the work that will be done by mainline pilots and the maximum work that can be done by other providers using the larger airline's code.
By the end of 1999, DL and CO accounted for nearly 2/3 of small RJ departures in the industry. CO had no scope provisions and DL was more relaxed relative to the industry. These facts conferred a distinct competitive advantage to each DL and CO. They now had an aircraft with 1,000+ mile range that could serve multiple hubs. More importantly it could overfly competitor hubs.
The scope have-not airlines badly wanted to be able to deploy the small RJs inside of their networks. At the end of the 90s, virtually every major airline was in negotiation with their pilots. In these negotiations, management wanted access to the small RJ and the pilots wanted to be compensated for the concessionary agreements they were working under.
And pay they did. Between the first half of 2001 and the first half of 2000, the network carriers saw labor costs increase $1.7 billion. Believe me when I say that scope is expensive. Moreover, it is hard to imagine management paying for more relaxed scope today.
The aircraft did many things over its life cycle: 1) introduced increased hub competition; 2) the flying was a labor arbitrage tool to average down pilot costs; and 3) in bankruptcy, mainline aircraft were aggressively removed but market presence was maintained using the small RJ.
Then consolidation. Frequencies at many airports were reduced in the name of redundant flying. In bankruptcy, carriers were more easily able to win access to the more preferred larger RJs - and the cost of scope was much cheaper. And here we are.
The penultimate chapter in the small RJ book is reducing the number of hubs served from any airport and still maintaining a presence. With the pilot supply situation, the final chapter titled market exit will be written for some. For airports, the emotions are many. Remember, airports do have multiple uses.
Much more to come on this issue,
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