Comparative Analysis of Regional Airline Industry in Europe and North America and Some Insight into Current Developments

This paper compares the regional airline industry in Europe and North America and through a combination of data analysis and case-studies investigates some of the current changes that are taking place. North American regionals are shown to have longer stage lengths, lower unit costs and higher load factors than their European counterparts. Turbo-props remain popular in Europe but 50 seat jets dominate in the United States. The bankruptcy of most US legacy carriers has led to renegotiation of contracts for regional flying, with prices being driven down. European regionals face different problems with rail competition, capacity constraints at hub airports and incursion by low-cost airlines. The differences in the cost structures of BA Connect, British Airways' former regional arm and flybe, operating a new hybrid format, are interpreted and it is shown that flybe has much lower labour costs. A number of alternative business models are then discussed. In the US the most popular is the sale of capacity to the majors, whereas in Europe many operate on a quasi-independent franchise basis. It is concluded that European regionals require more action to reduce costs while US regionals will increasingly have to take more of the risk from their major carrier partners. A renewed enthusiasm for turbo-props on short sectors is becoming apparent, while the European markets in particular are likely to see a shift to larger aircraft at lower frequency. This puts at risk the schedule convenience and network connections valued by business passengers.