Success of regional jets propels changes in airlines

Settlement of the 12-week Comair strike may show how regional carriers are flexing their muscle.

Tonight, the longest aviation strike in recent history could come to an end, and it may redefine the economics of flying in America.

Union officials will announce whether the 1,350 pilots at Comair, the nation's second-largest regional carrier, have accepted the tentative agreement hammered out last week.

But this is more than a dispute about demanding better pay for flying for regional carriers. Industry experts, who have been watching the negotiations carefully, say the outcome will give a clearer sense of the direction the nation's overall aviation industry will take.

The reason: "RJs" - the sleek, quiet, smaller-sized regional jets, which sparked both the recent success of regional carriers and their pilots' discontent. More and more, travelers in midsize cities are finding themselves on these new jets as they rack up bigger and bigger profits for the airlines, thanks in large part to their pilots' lower pay.

When Comair pilots hit the picket lines 12 weeks ago, they were determined to change that. Delta, Comair's parent company, was just as adamantly committed to keeping the pilots' pay in line.

"Delta was prepared to make a stand on this for the whole industry and let the carrier wither and die if [giving in to the pilots' demands] would make the whole regional business uneconomic," says David Stempler of the Air Travelers Association in Washington.

Turboprops, meager wages

For years, regional carriers were seen as just way stations for the major airlines. They mostly flew turboprops, and pilots were paid meager wages and worked long hours. Once they started flying regional jets, the pilots argued that they needed the same training as the pilots at the majors. Plus, the regionals were now raking in huge, sometimes double-digit profits for the airlines that owned them.

The settlement reached last week would cut pilots' duty days from 16 hours to 14-1/2. Starting salaries would go from $16,000 to 21,000. And senior pilots would see their salaries jump from $66,000 to $85,000.

Those are significant increases, but they still pale compared to the pay at Delta, the parent company. On Wednesday, pilots there ratified a new contract that made the average pilot's salary about $158,000.

"Airlines are still going to be able to make a profit on the [regional] routes that they're flying, but they're not going to be able to milk these regional carriers like cows. The profits just aren't going to flow like [they] used to," says Richard Gritta, a professor at the University of Portland in Oregon.

Until this strike, airlines and their regional affiliates were snapping up RJs at a record pace. There are now about 600 in service - about a 300 percent increase since 1997.

The reasons are simple. Passengers loved the high-flying jets, compared with the loud, low-flying, and diesel-choked turboprops usually flown by commuter airlines. It's estimated as many as 1,000 RJs are on order.

The airlines first pitched RJs as the saviors of small- and medium-size and less-profitable cities that lost service when Congress deregulated the airlines in 1978.

But the RJs haven't quite fit that bill. Instead of creating new jet service to places like Bangor, Maine, airlines realized they could use the smaller jets to increase the frequency of service for business travelers, their top dollar customers, at key hubs.

Because they can fly longer distances than the turboprops, airlines also are using them to increase what's called their "catchment area" - the radius from which they can draw passengers into their hubs.

"They can also increase competition," says Darryl Jenkins, executive director of the Aviation Institute at George Washington University. "The major airlines used to have a catchment area that they thought was theirs and theirs alone, and that's no longer true. Other major airlines can now draw passengers from there too."

But other analysts are far less sanguine. "It's a certainty that a major carrier can use a regional jet to drain some of the traffic away from a competitor's hub," says Clint Oster, a transportation economist at Indiana University at Bloomington. "But the question is, who's going to do it and where?"

Airlines, he says, tend not to step on one another's hub territory.

Mixed conclusions

The Government Accounting Office (GAO), which completed a major analysis of RJs earlier this year, concluded their impact on improving competition and service was mixed at best.

"The increase in the number of RJs has not led to an increase in the quality of service to smaller communities," says JayEtta Hecker, who oversees airline-competition issues at the GAO. "And while they do offer the potential to increase competition, we're also concerned about their use to inhibit entry and reduce competition."

(c) Copyright 2001. The Christian Science Monitor

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