The Next Wave of Deregulation – Part Three The Unfinished Revolution – October 23, 2009

This week, we look at the RJ revolution and its expected impact on the legacy carriers and the low cost carriers. As always, I would like all aviators to connect with their roots and one of the ways they can do that is by using the “Third Dimension Blog” as a resource.

Quote of the Week

The air up there in the clouds is very pure and fine, bracing and delicious. And why shouldn’t it be? —it is the same the angels breathe.”— Mark Twain “Roughing It” 1886

The Regional Jet Revolution

The first wave of deregulation was Hub and Spoke by the legacy carriers. The second wave was low cost carriers flying point-to-point. The third wave was the introduction of the regional jets. The next and final wave is deregulation of the ATC system and the airports. Today we will talk about the regional jets and their impact beyond the third and final wave of deregulation.

The RJs first appeared in 1997 and was the response by the legacy carriers to the low-cost carrier. I am not a fan of how the regional airlines or legacy carriers use these to depress the wages of professional aviators, but the RJs are here to stay so I will deal with the wage issue in a later series. For now, we know that the public loves them over the turboprops and Bombardier estimates the market for these airplanes in the US to exceed 1500 units by 2011. Embraer is further expanding that market, along with the seating capacity of their models.

Some analysts refer to the coming years in aviation as the “RJ Revolution”. This is based on the fact that the travelling public has become less tolerant of delays and the point-to-point offered by the RJs reflects the same thing that the low cost carriers are doing. The only exception being that they are controlled by the legacy carriers.

Now with that being said, I should point out that what the analyst are predicting is the RJs will be the new low-cost carriers competing with the old low cost carriers. It is said that the possibilities are endless, and that new entrepreneurial airlines will be able to offer service between hundreds of city-pairs not being served now. Boeing has pointed out that the fastest growing area for airlines over the next ten years or so will be point-to-point routes that overfly hubs.

Now if all of this is true, I think the legacy carriers will lead the pack and control the deliveries of new airplanes. I am sure that there will be some new upstarts, but by and large, the legacy carriers will lead and the low-cost carriers will follow. So, where does this take us?

I agree with the concept, but as I said in my commentary, the first of this month we are in need of a single voice that will speak about the minimum standards that need to be in place that dictate 1500 hours as a minimum time requirement, and the salary for the right seat need s to be 50K or greater with 100K for the left seat. If this does not happen then, as Captain Sulley said before Congress, the RJ revolution will simply be the new ATM machine for the legacy carriers, and those who follow in their footsteps.

Next week I will start a series on the “Mindset of an Aviator” and while I do not claim to be the Dr. Phil of aviation, I would like to see if we can simply reduce it to its simplest denominator and perhaps build a foundation to address the issue of the day—Job Security. So, until then take some time to look back, connect with your past and remember as an aviator you are a “Gatekeeper of the Third Dimension.”

Protect your profession, your future and the future of your fellow aviators.

Robert Novell

October 23, 2009