The Death of the 50 Seat RJ

[Fly4hire]

Sorry ~~~~^~~~~, looks like everyone else, including the exec's disagree with RJ's being cheaper to operate as fuel goes up...

http://www.usatoday.com/travel/flights/2008-05-21-regional-jets-cutbacks_N.htm

By Dan Reed, USA TODAY

Record jet-fuel prices are reversing one of the biggest trends in domestic
air travel over the last 15 years, and that could leave some smaller cities
with fewer daily flights — or none at all.

In the past eight years, hundreds of small regional jets with 50 or fewer
seats, called RJs, replaced both smaller turboprops and bigger commercial jets
on dozens of routes between big hubs and midsize airports.

The RJs were never huge profit makers in the best of times. Rather, they were
promoted as economical substitutes for 110- to 140-seat jetliners on
thin-demand routes because their ownership and operating costs were lower per
mile flown. They were also marketed as more consumer-friendly than smaller,
noisier, slower and less comfortable turboprop planes. Airlines invested
heavily in them starting in the late 1990s, primarily to feed more travelers
from small markets into their hubs and onto their more profitable mainline
flights.

As a result, one in four commercial takeoffs today is made by a 50-seat or
smaller RJ.

There were 1,333 such planes flying in the USA on April 1, down from the peak
of more than 1,350 a year ago, OAGback Aviation Solutions says. By
Christmas, that number will be near 1,200, if all the service cutbacks announced
and recently hinted at are implemented.

Cutbacks planned for fall

An announcement by Delta Air Lines this spring indicates how business
judgment has turned against the RJs. Delta, which early this decade committed
itself to operating the biggest fleet of them in the nation through its
regional affiliates Comair and ASA, said it will dump 70 of those planes out of
its Delta Connection operation by fall.

On Wednesday, American said it will remove from service 35 to 40 RJs flown by
its regional airline affiliates. That's on top of grounding 40 to 45 of
its mainline jets and a small number of turboprop regional airliners.

Continued high oil prices are likely to cause the nation's fleet of RJs to
shrink faster and further than even the harshest critics of RJs originally
anticipated.

"We think now that something like 835 RJs now in service in the USA will come
out by 2013," says consultant Michael Boyd of the Boyd Group in Evergreen,
Colo.

That would represent a 60% shrinkage of the USA's fleet of 50-seat and
smaller RJs in just six years.

Boyd, an early proponent of RJs in the early 1990s, was one of the first to
sound the alarm, in 1999, about the coming RJ glut. By 2007, with oil
threatening $70 a barrel, he was predicting that about 1,200 RJs with 50 or fewer
seats would be removed from service worldwide by 2018. That's out of a
total of nearly 2,300 in service.

Now, with oil selling above $130 a barrel, Boyd estimates 1,700 of them will
be gone by 2013.

"Airlines don't throw these big pieces of aluminum across the sky because
it's fun," he says. "If the cost of operating a plane exceeds the revenue that
can be put on board that plane, as it does now with the small RJ, it
should be parked."

Parking 50-seat and smaller RJs will mean less service for many of the
smaller cities where they are the primary or only vehicles of commercial air
transport. Carriers have begun the gradual process of shaving markets back from
five to seven flights a day to four or five, or even fewer.

"You can probably fly a 70-seater for very close to what you can fly a
50-seater," says Kit Darby, president of Air Inc., an aviation jobs market
consulting firm. "What you'll likely see more of is … fewer flights each day on
70-seaters instead of 50-seaters. That way, they can capture the passenger
demand that is there, but at overall lower operating costs."

In some of the thinnest-demand markets, fewer 50-seaters likely will mean
losing service altogether. Currently, more than half of the 50-seaters fly on
routes with 75 or fewer total passengers a day. If airlines raised fares
enough to cover their operating costs in such markets, consumer demand could
fall below the threshold for just one or two flights a day in such
markets.

Aircraft manufacturing analyst Richard Aboulafia of the Teal Group says that
in smaller cities where a larger airport is within two to three hours by
car, operating fewer flights a day — either on 50- or 70-seat RJs — could
become economically unsupportable as business travelers and leisure fliers opt
to make relatively short drives to save time or money.

He also expects regional airlines to eliminate most, perhaps all, of their
longer "hub bypass" flying in RJs.

Example: American Eagle said this month it will drop flights between
Northwest Arkansas Regional Airport and Raleigh/Durham, N.C. That route bypasses
American's Dallas/Fort Worth and Chicago O'Hare hubs and was designed to
connect manufacturers' representatives from North Carolina with buyers at
Wal-Mart's headquarters in Bentonville. Such routes are economic lost causes
today.

An expected reversal

The two dominant makers of 50-seat and smaller RJs foresaw the problem early
this decade.

Even as the jetmakers were delivering hundreds of 50-seat RJs, big airlines
were shrinking their costs by shifting their most marginal flying to
regional affiliates. The manufacturers figured that at some point, market growth
would force the carriers to use larger planes on many of those routes and
demand for more 50-seaters would slow to a trickle. So Canada's Bombardier
and Brazil's Embraer decided to stop making 50-seaters for the U.S. market
even before fuel began its climb.

Both now focus on producing larger aircraft seating 70 to 100 passengers.
Embraer's 70-seat E-170 and larger models feature a wide fuselage cross
section that comes close to the fuselage size of so-called mainline narrow-bodies
such as the Boeing 737 and MD-80 and the Airbus A320 family of planes.
Bombardier recently began offering a larger family of planes that will compete
with the 110- to 140-seat class now dominated by the 737 and A320.

HIGH FUEL PRICES HURT REGIONAL JETS' PROFITABILITY | Story
The trend: Record jet-fuel prices are making 50-seat regional jets
unprofitable to fly, says aviation consultant Michael Roach, of Roach & Sbarra. An
online analyzer tool his firm developed helps show why. Analysis: In this
example, Roach compared ExpressJet's costs of flying a 50-seat regional jet,
an Embraer ERJ-145, against Continental Airlines' costs of flying a Boeing
737-500 with the same number of passengers and on the same 596-mile route.
ExpressJet does much of its flying as Continental Express. Roach based his
analysis on both airlines' reported third-quarter costs per available seat
mile—what they spent to fly one seat one mile—and ExpressJet's average
passenger load and its average flight length in the third quarter. ExpressJet's
third-quarter cost represents the portion of its fuel bill it paid,
excluding a subsidy from Continental. For this analysis, the airlines were assumed
to pay the same prices for fuel currently. Conclusion: The 737's total
operating costs — calculated by multiplying cost per seat mile times number of
seats times distance flown — remain significantly higher than the ERJ’s,
and it would lose money on such routes. The ERJ's costs per seat mile now
exceed those of the larger Boeing jet, which potentially might carry more
passengers and generate more revenue per flight. At fuel prices of $3.15 a
gallon, the ERJ's total operating cost increases 39% in this example, making
it, too, a money-loser on such routes.

As has been said before - a larger less fuel efficient jet is more profitable than a smaller more fuel efficient one with fuel in at these prices.

 

[~~~^~~~]

Sorry ~~~~^~~~~, looks like everyone else, including the exec's disagree with RJ's being cheaper to operate as fuel goes up...

http://www.usatoday.com/travel/flights/2008-05-21-regional-jets-cutbacks_N.htm

As has been said before - a larger less fuel efficient jet is more profitable than a smaller more fuel efficient one with fuel in at these prices.

Look, I'm not a 50 seat RJ fan. The point of all my effort writing has to been to try and make people realize that the scope issue is not dead due to fuel prices.

Nothing is cheaper to operate when fuel goes up.

Making the point that the RJ and the 737-500 both lose money isn't much of a point. In case you haven't noticed, Delta already parked their old generation 737's including some 300's with the much more efficient CFM56's.

I agree that on a unit cost basis, the 100 seater is needed. Steenland ordered 72 large RJ's that will be here this fall to replace the DC9's in the 100 seat market. Steenland obviously knows the numbers better than we do.

As General wrote in another thread, it was likely that furloughs would happen after the merger. Fuel may result in furloughs before the merger. If we are merged, it will be me that gets furloughed.

It would be better for all of us if we could get the DC9's replacement pilots on the list.

 

[ACL65PILOT]

Yes, Fin with fuel where it is, you and I will be looking for jobs in short order.
I am just waiting for the first official furlough announcements to start.

 

[gangdev]

I agree that on a unit cost basis, the 100 seater is needed. Steenland ordered 72 large RJ's that will be here this fall to replace the DC9's in the 100 seat market. Steenland obviously knows the numbers better than we do.


Who will fly these 100 seaters? Compass?

 

[SEVEN]

Back to Props............

 

[Superpilot92]

I agree that on a unit cost basis, the 100 seater is needed. Steenland ordered 72 large RJ's that will be here this fall to replace the DC9's in the 100 seat market. Steenland obviously knows the numbers better than we do.


Who will fly these 100 seaters? Compass?

Fins was being misleading. The 72 "large RJs" are the crj900 and e175s that were ordered a long time ago. That number of regional aircraft was pretty much the maximum number that can be ordered under the NWA scope language. While some of the dc9 flying has been replaced (big screw up by nwa mec), the dc9 cant just be parked and completely replaced by regional feed. No regionals are getting 100 seaters, its not going to happen.

 

[~~~^~~~]

Fins was being misleading.

I did not write that the regionals were getting 100 seaters. I wrote that they are getting airplanes to serve the 100 seat market. If they leave 24 leisure fares with screaming kids at the gate, but still get on the 68 business passengers with closer to full fares, management is happy.

Regards,

 

[Superpilot92]

I did not write that the regionals were getting 100 seaters. I wrote that they are getting airplanes to serve the 100 seat market. If they leave 24 leisure fares with screaming kids at the gate, but still get on the 68 business passengers with closer to full fares, management is happy.

Just wait and see....

I was correcting the poster that replied to you. Your post was misleading to them so i answered. I think frequency will go down and bigger mainline planes will be the used in place of the multiple smaller planes. We shall see.

 

[J.Otto]

Good. More guys need to cut their teeth on a TP before moving on to the "glamorous" jet.

 

[Oakum_Boy]

Yep. I agree. A jet is not the place to start. Although the zeros to heros will be pissed!