Chapter 1898 Regional Airlines Are Not Easy to Mess with Either

Hawaiian Island Airlines, which Yang Cheng acquired from Larry Ellison, and Hawaiian Airlines, which he later directly acquired, are actually regional airlines.

In the United States, regional aviation plays a very important role. Of course, the unique operating model also ensures the profitability of regional aviation.

Take SkyWest Airlines as an example. As the leading regional airline in North America, its cooperation methods with other major U.S. trunk airlines are: capacity purchase agreement and revenue sharing agreement.

SkyWest's revenue from capacity purchase agreements accounts for about 80%. The capacity purchase agreement, also known as a space custody agreement (CPA), is similar to a wet lease, but the difference lies in the aircraft identification and service methods.

CPA refers to a business model in which large network-based, full-service airlines purchase capacity from small airlines or regional airlines.

Mainline airlines can pay a fixed fee to the company based on the number of flights completed by regional airlines, flight time, block time, number of aircraft in service each month, etc., and directly pay or compensate for specific direct operating costs.

In addition, service quality is generally evaluated through third-party organizations. If the service quality is not up to standard, the rent will be reduced, which will prompt regional airlines to continuously improve service quality.

Similarly, if the service is good and passengers are satisfied, additional rewards will be provided based on flight completion, on-time performance and other business indicators.

In addition, another benefit is that mainline airlines bear the risk of fuel price fluctuations and other expenses, while regional airlines can avoid the risks of financial fluctuations such as ticket prices, passenger numbers, fuel prices, etc.

Of course, regional airlines will not benefit from ticket revenue, ancillary revenue (such as baggage and meal fees), passenger numbers, fuel price fluctuations, etc.

This model enables regional flight connections between U.S. mainline airlines, eliminates the risks of operating regional routes, and brings more flexibility.

In addition, since the logo of the aircraft has been changed to that of a mainline airline, for example, SkyWest Airlines serves Delta Airlines, then the logo of the aircraft has been changed to Delta. Through the brand effect of Delta Airlines, more passengers can be attracted to fly on SkyWest Airlines. transit.

At the same time, if a safety incident occurs, Tianxi and Delta can clarify the ownership of safety responsibilities according to the terms of the signed cooperation agreement.

Another form of cooperation is a revenue sharing agreement, under which mainline airlines and regional airlines allocate fare revenue on a formula-based ratio for specific routes.

According to the agreement, regional airlines can share part of the passenger ticket revenue of regional flight segments and part of the revenue of main route segments.

When a passenger only takes a regional flight, the regional airline receives all of his or her fare.

Therefore, even if we are facing global crises, such as wars, disasters, etc., which have caused revenue losses to some major U.S. airlines, regional airlines like SkyWest Airlines can still achieve profitability, and the numbers are no less than before How many!

Because SkyWest's routes are not affected by the international ban, as long as domestic flights are allowed in the United States, they will make money; on the other hand, SkyWest operates on the basis of contracts with major airlines, and its business The model is almost equivalent to "guaranteed harvest in droughts and floods", and fixed profits can be obtained according to the contract.

Today, SkyWest Airlines has signed capacity purchase agreements, or CPAs, with four mainline airlines, including Delta, carrying approximately 40 million passengers annually.

This operating model enables SkyWest Airlines to have a huge fleet of 483 aircraft, accounting for 19.6% of the industry's capacity. Become the largest regional airline leader in the United States.

Among them, the number of aircraft serving Delta is 199, United Airlines 193, and the rest are only a few dozen, which together are less than a fraction of the number of Delta or United Airlines.

Among them, there are more than 400 aircraft in the form of capacity purchase agreement cooperation, accounting for more than 80%, and the rest are in the form of revenue sharing agreement cooperation.

SkyWest Airlines' main base airports are all over the country, including Chicago, Denver, Houston, Los Angeles, Minneapolis, Phoenix, Salt Lake City, San Francisco, and Seattle.

Among them, the cooperation between SkyWest Airlines and Delta Air Lines mainly focuses on hubs such as Minneapolis, Detroit, Salt Lake City, and Atlanta.

Compared with the cost control capabilities of low-cost airlines, regional airlines are obviously better in this regard. Like low-cost airlines, regional airlines reduce operating costs through a single aircraft model. The difference is the type of aircraft they operate. Low-cost airlines are generally Boeing 737s. Regional airlines mainly have two-cabin layouts of 85 and 76 seats, and single-cabin layouts of 70 and 50 seats. The aircraft types are mainly CRJ and ERJ series aircraft, and each airline is basically concentrated. 1-3 types of aircraft are operated.

In general, the biggest advantage of regional airlines is stable cost control and stable profit model. As long as there is no devastating natural disaster, regional airlines can at least guarantee a decent life and will never lose their pants.

Compared with SkyWest Airlines, which is relatively close to Delta, Mesa Airlines has been around for a shorter time, and has a closer relationship with American Airlines and United Airlines. It is the kind of pig that stands on the wind and rides on the wind. And it has advantages that many competitors do not have, making it easy to become bigger and stronger.

Although Mesa Airlines has really become famous in recent years, in fact they have had a cooperative relationship with US Airways for decades. After the merger of American Airlines and US Airways, the new American Airlines maintained this cooperative relationship.

Of course, this also made Mesa Airlines instantly become a close partner of the world's largest airline, which is of extraordinary significance. It is this cooperative relationship that provides Mesa Airlines with development opportunities and allows it to dare to expand its fleet size.

Unlike American Airlines, United Airlines resumed its partnership with Mesa Airlines and provided 30 E175 aircraft.

This is also the first time that United Airlines has purchased a regional aircraft. Mesa Airlines attaches great importance to the development of this relationship and calls this the second key point in its development.

From 2013 to now, Mesa Airlines has doubled its operational scale and added more than 1,000 jobs. According to the current operating plan, Mesa Airlines will need 700 cabin service personnel and 500 pilots in the next three years. , is completely striving to build the world's top regional airline.

And Mesa Airlines now looks impeccable. Through bankruptcy reorganization, Mesa Airlines' internal structure is more reasonable and costs have dropped significantly. Before the financial crisis, the company had more than 200 aircraft and more than 5,000 employees. When they came out of bankruptcy protection Later, the company had fewer than 70 aircraft and debt reduced by about $700 million.

As the market gradually recovers, Mesa Airlines' fleet has been rapidly expanded, and its aircraft have become more advanced and fuel-efficient, giving it greater competitiveness and comparative advantage in the market.

And Mesa Airlines has a good management team and many excellent employees.

From the inside out, Yang Cheng couldn't find any space to attack.

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