Regional airlines not sharing in majors' success
DALLAS - For passengers traveling between smaller cities and large hub airports, the ticket may say Delta, American or United, but they're likely flying on a regional airline whose planes are painted in the major carrier's colors.
This arrangement helps the big airlines pack their planes more cheaply and contributes to recent record profits.
It isn't as wonderful for the regional airlines, however. Their profits are shrinking, costs are rising, and they're having trouble finding enough pilots to work for the salaries they pay.
Consumers should be concerned. Fares could rise as regional airlines are forced to raise pilots' pay. Aviation experts predict that some regional airlines may fail, which could lead to reduced service at smaller airports.
This week, an airline industry group said that 86 communities - from former hubs such as Cleveland and Memphis to small cities like Dickinson, North Dakota, and Hollis, Alaska - have lost at least 10 percent of their flights since last year. Regional airlines say the trend will get worse this winter and next year because of a pilot shortage.
About half of all passenger flights in the U.S. are operated by regional airlines. The planes don't say Republic, SkyWest or Mesa on the side - they are painted in the colors and logos of brands such as Delta Connection, American Eagle or United Express.
American Eagle operates out of East Texas Regional Airport.
A decade ago, many of the regionals were earning steady profits. That began to change when several of the big airlines went through bankruptcy and rewrote their contracts with regional airlines to cap the small guys' profit margins.
Regionals that boasted 20 percent profit margins in the late 1990s suddenly had their margins capped at around 12 percent, a level some don't even reach, says Robert Mann, an airline-industry consultant.
The most successful regional airlines are still making money, but far less.
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