[FONT=Tahoma, Verdan, Lucida]Hot Flash[/FONT][FONT=Tahoma, Verdan, Lucida] - January 9, 2006[/FONT]
[FONT=Tahoma, Verdan, Lucida]Needed: Parking Space In The Canadian Desert
[/FONT][FONT=Tahoma, Verdan, Lucida]Less RJs. But Not Necessarily Less Air Service[/FONT]
[FONT=Tahoma, Verdan, Lucida]Export Development Canada (EDC), the agency that provided funding to a number of Bombardier customers, this month is welcoming home 42 CRJs, the result of returns from Northwest and the shutdown of Independence Air. [/FONT]
[FONT=Tahoma, Verdan, Lucida]Getting these airplanes back is kinda like having 42 clumsy brother-in-laws show up at your doorstep. EDC is putting on a brave face, noting that they can place these aircraft easily at other carriers, which, in this environment, is an expression of wonderful optimism, especially in light of the fact that some CRJs are, as we speak, being scrapped for parts. [/FONT]
[FONT=Tahoma, Verdan, Lucida]This is just the start. Our fleet forecast indicates that another 350 or so CRJs and ERJs will come out of the North American air transportation system by the end of 2008. The threat by Continental to yank 69 ERJs out from under ExpressJet is part of this trend. While Continental's current intent is to to get lower operating costs, either via another SJP or via ExpressJet cutting its rates, the bottom line is the same: Economics are rapidly reducing the mission envelope of CRJ and ERJ aircraft. [/FONT]
[FONT=Tahoma, Verdan, Lucida]But not eliminating it entirely.[/FONT]
[FONT=Tahoma, Verdan, Lucida]Remember the reason these iron-geese are flying home to Canada: they are excess to the needs of the US air transportation system. Independence Air, regardless of good service, was essentially the poster-child for capacity that had no visible means of support. The Northwest, United, and Delta systems also clearly are over-invested in RJs, particularly the 50-seat and under versions.[/FONT]
[FONT=Tahoma, Verdan, Lucida]Just The Fat's Going. [/FONT][FONT=Tahoma, Verdan, Lucida]The Boyd Group Global Fleet Forecast is based on a bottom-up, airline-by-airline, region-by-region analysis. Using this approach, we were the first to accurately forecast the RJ glut the industry is now facing. But this methodology also illuminates what the industry will look like in the absence of these excess small jets. [/FONT]
[FONT=Tahoma, Verdan, Lucida]The picture may be ugly for the entities holding financial paper on RJs. But it's much less so for communities whose air service is primarily based on RJs. [/FONT]
[FONT=Tahoma, Verdan, Lucida]With, say, 400 fewer RJs than today, the conclusion in some corners tends to be that lots of smaller communities will lose air service. That's mostly because the not-too-informed see the term "regional jet" and assume that it was primarily designed to fly to smaller "regional" markets. Indeed, there are some professors in university aviation [/FONT]
[FONT=Tahoma, Verdan, Lucida]departments, the types who don't know the difference between a gallon of jet-A and a bottle of Johnny Walker Black, still warping students' minds with this stuff. [/FONT]
[FONT=Tahoma, Verdan, Lucida]Remember, the "regional" in regional jet referred to the airline segment this aircraft was originally aimed at, and not necessarily the markets it would fly. It was to be an expansion airplane for what were then independent "regional" airlines. That category of airline is gone, but the name stuck.[/FONT]
[FONT=Tahoma, Verdan, Lucida]One of the major reasons that we're seeing RJs being pulled from service is that they are increasingly non-viable in many of the mission applications that mega-carriers have put them in. Like long-haul O&D service to points in Florida. (Columbia to Tampa?) Or as fill-in frequencies in key, high-density competitive markets. ORD-ATL? Or in thin, long-haul hub spokes. (DEN-RDU?) In many (not all, but a whole lot) of these applications, the RJ is about as competitive as bringing a knife to a gunfight.[/FONT]
[FONT=Tahoma, Verdan, Lucida]It is in these types of missions where the reduction in RJ fleets will be mostly seen, not in wholesale elimination of small and midsize community air service. Some frequency reductions, perhaps. Fewer off-hub O&D nonstops, yes. But no major reductions in access for the vast majority of such communities that today can support 50-seat jets.[/FONT]
[FONT=Tahoma, Verdan, Lucida]Needed: Parking Space In The Canadian Desert
[/FONT][FONT=Tahoma, Verdan, Lucida]Less RJs. But Not Necessarily Less Air Service[/FONT]
[FONT=Tahoma, Verdan, Lucida]Export Development Canada (EDC), the agency that provided funding to a number of Bombardier customers, this month is welcoming home 42 CRJs, the result of returns from Northwest and the shutdown of Independence Air. [/FONT]
[FONT=Tahoma, Verdan, Lucida]Getting these airplanes back is kinda like having 42 clumsy brother-in-laws show up at your doorstep. EDC is putting on a brave face, noting that they can place these aircraft easily at other carriers, which, in this environment, is an expression of wonderful optimism, especially in light of the fact that some CRJs are, as we speak, being scrapped for parts. [/FONT]
[FONT=Tahoma, Verdan, Lucida]This is just the start. Our fleet forecast indicates that another 350 or so CRJs and ERJs will come out of the North American air transportation system by the end of 2008. The threat by Continental to yank 69 ERJs out from under ExpressJet is part of this trend. While Continental's current intent is to to get lower operating costs, either via another SJP or via ExpressJet cutting its rates, the bottom line is the same: Economics are rapidly reducing the mission envelope of CRJ and ERJ aircraft. [/FONT]
[FONT=Tahoma, Verdan, Lucida]But not eliminating it entirely.[/FONT]
[FONT=Tahoma, Verdan, Lucida]Remember the reason these iron-geese are flying home to Canada: they are excess to the needs of the US air transportation system. Independence Air, regardless of good service, was essentially the poster-child for capacity that had no visible means of support. The Northwest, United, and Delta systems also clearly are over-invested in RJs, particularly the 50-seat and under versions.[/FONT]
[FONT=Tahoma, Verdan, Lucida]Just The Fat's Going. [/FONT][FONT=Tahoma, Verdan, Lucida]The Boyd Group Global Fleet Forecast is based on a bottom-up, airline-by-airline, region-by-region analysis. Using this approach, we were the first to accurately forecast the RJ glut the industry is now facing. But this methodology also illuminates what the industry will look like in the absence of these excess small jets. [/FONT]
[FONT=Tahoma, Verdan, Lucida]The picture may be ugly for the entities holding financial paper on RJs. But it's much less so for communities whose air service is primarily based on RJs. [/FONT]
[FONT=Tahoma, Verdan, Lucida]With, say, 400 fewer RJs than today, the conclusion in some corners tends to be that lots of smaller communities will lose air service. That's mostly because the not-too-informed see the term "regional jet" and assume that it was primarily designed to fly to smaller "regional" markets. Indeed, there are some professors in university aviation [/FONT]
[FONT=Tahoma, Verdan, Lucida]Remember, the "regional" in regional jet referred to the airline segment this aircraft was originally aimed at, and not necessarily the markets it would fly. It was to be an expansion airplane for what were then independent "regional" airlines. That category of airline is gone, but the name stuck.[/FONT]
[FONT=Tahoma, Verdan, Lucida]One of the major reasons that we're seeing RJs being pulled from service is that they are increasingly non-viable in many of the mission applications that mega-carriers have put them in. Like long-haul O&D service to points in Florida. (Columbia to Tampa?) Or as fill-in frequencies in key, high-density competitive markets. ORD-ATL? Or in thin, long-haul hub spokes. (DEN-RDU?) In many (not all, but a whole lot) of these applications, the RJ is about as competitive as bringing a knife to a gunfight.[/FONT]
[FONT=Tahoma, Verdan, Lucida]It is in these types of missions where the reduction in RJ fleets will be mostly seen, not in wholesale elimination of small and midsize community air service. Some frequency reductions, perhaps. Fewer off-hub O&D nonstops, yes. But no major reductions in access for the vast majority of such communities that today can support 50-seat jets.[/FONT]
