Jets Stretch Regionals' Reach

Last week's American Eagle order of 67 regional jets and Continental Express' announcement to exercise options for an additional 25 nearly doubles the regional jets in service today.

These orders underscore a trend that in the next few years will put nearly one-third of all regional airline seats on jets.

Eagle's order for 42 Embraer EMB-145 (ERJ) 50-seaters and 25 Bombardier Canadair Regional Jet (CRJ) 700 70-seaters not only shatters any doubts about the impact of these planes, but also comes as welcome news to business travelers who often feel propeller-driven aircraft are not as safe or comfortable as jets.

Irrespective of statistics that clearly demonstrate that turboprops are equally safe, that fear sometimes drives business travelers--who still make up 60-70 percent of commuter airlines' customers--to irrational traveling practices, according to corporate travel managers.

Despite these fears, until now there has been little choice other than turboprops when flying between small or medium-sized cities and major hubs as the larger carriers have, for the most part, turned over such routes to their regional partners. Now that trend is being tweaked with the proliferation of these smaller jets that have captured the enthusiasm of the aerospace industry.

"These jets will change the structure of the domestic airline industry," said analyst Michael Boyd, president of Golden, Colo.-based Aviation Systems Research Corp. and a longtime proponent of regional jets. "In the next five years, most of the net new route expansion in the U.S. will be made possible by these aircraft. While not a turboprop aircraft per se, the regional jet will replace most turboprops in the mega carrier fleets."

According to Walt Coleman, president of the Regional Airline Association, there are now 101 regional jets in service with outstanding orders of 253. The jets now represent about five percent of the total U.S. regional fleet of 2,127 and about 11 percent of seats, but if all 253 are delivered, he said, they will account for 12 percent of the fleet and nearly 29 percent of seats.

From the perspective of corporate travel management, the growth of regional jets could go so far as to improve compliance and productivity since some travelers will often choose a non-preferred carrier over a turboprop, or take a one-stop jet flight rather than a direct turboprop flight.

That's the case for some Black & Decker employees. Pete Buchheit, director of travel and meeting services and chairman of the NBTA's airline committee, said some B&D travelers, rather than take a direct flight from BWI to a Bridgeport, Conn. manufacturing site, prefer to fly a jet to Hartford and then double back 56 miles in a car.

Buchheit also said some employees at a facility in Asheboro, North Carolina, prefer to fly lesser-known carriers such as AirTran and Eastwind that fly jets to some destinations where US Airways has only regional carrier turboprop service. Given the stigma that also is associated with small and low-cost airlines, it's interesting that the Black & Decker North Carolina travelers prefer them simply because they use jets. "They don't associate turboprops with major carriers," said Buchheit.

The NBTA airline committee, which on Friday met with RAA's Coleman, earlier this year identified regional airlines as a top area of focus for 1997, and is evaluating ways to expand the knowledge and attempt to reduce misperceptions about regional carriers.

"It's a matter of passenger acceptance--the CRJs are a much easier sell because the safety factor, in terms of perception, is 100 percent higher," said Elaine Kretten, travel administrator for Cincinnati-based Senco Products. "American Eagle flies an ATR out of Cincy, but we don't allow people to fly it even though we use an AA jet to Dallas," she said, referring to the 1994 crash in Indiana of an American Eagle ATR-72, after which the Federal Aviation Administration barred ATR model planes from flying in icy weather. "If Eagle switched to a CRJ, we'd reconsider."

Kretten said her company's travelers now fly the Comair CRJ direct to places like Harrisburg, Pa., which was once a US Airways-only market with a one-stop turboprop connection through Pittsburgh.

Said Ruth Mairose, travel coordinator for Cincinnati's Western-Southern Life, "The CRJ has made a big impression to places like Akron and Charlotte--we try to put as many people on there as we can." Mairose, however, said it is more a matter of convenience and comfort than safety: "Our people aren't too finicky," she added.

Given their desirability among business travelers, the CRJs are increasing the ferocity of competition between the commuter partners of major carriers, and in turn, between the majors themselves. In announcing last week's order, Eagle president Dan Garton acknowledged that "we've been threatened in Chicago by regional airline competitors in Cincinnati and Cleveland," referring to Comair and Continental Express, respectively. Garton also said AMR wants to bring its total jet departures in Chicago closer to United's level. "The Canadair aircraft will enter service in the Spring of 1998, beginning in Chicago and later Dallas/Fort Worth," he added.

According to Comair senior vice president of marketing Chuck Curran, "the regional jets helped catapult us into a new category of regional airline. Now our goal in life is to prevent everyone from going to Chicago."

Boyd insists that "AMR wants to be all jet in seven years." For Comair, CRJs already encompassed 75 percent of the carrier's seating capacity before the carrier's May order of up to 75 more, which will begin entering service this September. Comair, too, will eventually replace all of its fleet with CRJs.

That regional airlines may be on their way to becoming the fiercest battleground in the domestic airline industry should come as no surprise given their higher rate of passenger demand versus the majors, as well as their increasingly important role in the hub and spoke system. Members of the Regional Airline Association last year saw an 8.3 percent increase in passengers and an 11 percent jump in revenue passenger miles. For members of the Air Transport Association, those same figures were six percent and seven percent, respectively.

"As the regional carriers introduce these newer, faster planes," said RAA's Coleman, "Some of them will be going in to new markets, some will replace either turboprop or larger jet service and others will go in as a supplement to existing jet service."

The main application for the jets is on lower demand routes of 600-1,500 miles. Citing a 50-page report his company issued in May, Boyd said the aircraft will extend the reach of major hubs and make them more competitive. For example, a city like Billings, Montana, could see direct service to Dallas/Fort Worth, which would enable AA to "reach over" United's Denver hub. On the down side, Boyd said many smaller cities located an hour or so from a spoke airport with jet service will lose commuter service. In general, the regional jets will help midsized cities, he said.

Robinson-Humphrey's James Parker, also an analyst, reported in February that the "reach" phenomenon already is occurring: "It appears that Comair, with its regional jets, has taken some traffic to Delta at Cincinnati, which previously moved in turboprop aircraft operated by Atlantic Coast Airlines over United's Washington-Dulles hub." Atlantic Coast has since ordered 12 RJs, according to the RAA.

Cincinnati-based Delta partner Comair has the nation's largest fleet of 50-seat CRJs, with 50. The airline has introduced new nonstop jet service to a slew of cities from Cincinnati, including Baltimore, Cedar Rapids, Charlotte, Grand Rapids, Harrisburg, Knoxville, Little Rock, Rochester, Syracuse, Toledo and Wilkes-Barre/Scranton, among others. Comair also is using the jets to shore up Delta's operations in major cities with new point to point services such as Boston-Montreal, Boston-Toronto, LaGuardia-Charleston, LaGuardia-Greenville/Spartanburg and LaGuardia-Montreal.

Still, Boyd said, the regionals won't be the only ones to up their competitive efforts because of the regional jets. "You'll see these aircraft used in some really neat ways," he said.

Mesa Airlines, whose parent Mesa Air Group operates feeder service for America West, United and US Airways, will use 10 of 16 CRJs on order to operate new independent service at Fort Worth's Meacham Airport. Three of those CRJs already are flying between Meacham and Houston Hobby as an alternative to Houston International, Dallas/Fort Worth and Dallas Love Field--hubs for Continental, American and Southwest, respectively.