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Future Proofing the Regional Airline Sector
How one small carrier is looking at its industry from a longer-term lense.
A lot has changed for regional airlines in just three years. But one small U.S. airline is thinking outside the box as constraints continue to pile on the regional sector. Far from immune to labor constraints, CommuteAir is broadening its horizons, adding a single Embraer E170 to its fleet.
After beating long-time market incumbent ExpressJet in 2020, the regional carrier now exclusively flies within the United network from its bases in Houston, Denver, and Washington D.C. With a 40% ownership stake by United, CommuteAir operates to 75 destinations with 60 Embraer E145XR jets. Like many of its peers, CommuteAir is looking for new ways to attract and retain talent while preserving air service to small communities.
At a hangar celebration, CommuteAir showed off its first E170 in its house livery. Previously belonging to an Australian operator, CommuteAir’s new jet will not operate in United’s network. Instead, the airline has bigger plans for the 76-seat aircraft.
A Reshaping 50-seat Market
The market for 50-seat regional aircraft is increasingly becoming more complex. Rising operating costs are largely to blame. Shorter routes with less seats mean fewer Available Seat Miles (ASMs) and higher unit costs. As fuel costs and pilot wages increase, airlines are pivoting to larger 76-seat aircraft, such as the Embraer 170/175 series.
According to the Regional Airline Association (RAA), the number of CRJ-200s operated by U.S. carriers decreased by over 60% between 2008 and 2020. Similarly, 50-seat Embraer jets have also seen a 60% reduction in flights between 2008 and 2022 among the major U.S. carriers. By comparison, the larger Embraer E170 series has seen a 13% increase in flight operations, per Cirium Diio data.
As an operator of only 50-seat jets, CommuteAir is thinking proactively about its positioning in the marketplace. Not only will proving to its sole mainline partner that it can successfully operate the larger E170 be key, but diversifying its business is also beneficial for the long term.
“What do people want to see from CommuteAir? What do we want to see from CommuteAir? How do you survive in this crazy industry right now where, you know, we went from a pilot shortage to a captain shortage now…,” CommuteAir’s CEO Rick Hoefling told AirlineGeeks during an interview onboard his company’s newest aircraft. “So the pendulum is starting to move. So we have to have a short-term, how do you get through these crazy times, but a longer-term view and a longer-term plan.”
Filling a Gap
It is not all too common for a regional carrier to add an aircraft to its fleet that does not operate directly for its mainline partner. With only one E170 in its fleet for the foreseeable future, CommuteAir plans to use the larger Embraer jet for ‘training purposes’ and ‘limited charter services,’ according to a 2022 application with the Department of Transportation (DOT).
“So this aircraft allows us to move from a small commuter certificate to a much larger public convenience and accessibility certificate. And that paves the way for future opportunities for CommuteAir, operating much larger gauge aircraft,” Hoefling shared.
“Right now, our plan for 2024 is to get that ops certificate…and then move forward with doing some testing [of] the charter market,” Hoefling continued. He says that the aircraft will fall under Part 121 supplemental operating requirements. CommuteAir has applied for charter certification from the DOT.
Hoefling – who spent 36 years at United before taking the helm at CommuteAir – sees an underserved charter market in the U.S. “The Embraer 170 and 175 fleet, the 76-seat market in the United States, is underserved from a charter perspective,” he said.
“If you go and look at DOT Form 41 data and you look at the number of 50 seat charters that are operated and then you look at the number of narrowbodies, larger over 100 plus seat aircraft, those things measures in the tens of thousands. In 2022, there were only 750ish charters operated with a 76-seat aircraft,” he said. “And so this fills a gap, and this is something that we’re leaning into, that is an opportunity for us to explore.”
CommuteAir is looking at a variety of methods to ‘sophisticate’ its future business strategy. This doesn’t just include larger gauge aircraft, Hoefling said. But it also could include acquiring MRO services or flight schools.
“We’re trying to get through this crisis in a longer-term view,” he added in reference to some of the post-pandemic constraints on regional operators, including an ongoing pilot shortage.
Despite some of these constraints, CommuteAir managed to out-perform Mesa and GoJet – who also exclusively operate for United – during the Summer 2023 peak. Averaged across June, July, and August, nearly 82% of the carrier’s flights were on time, per DOT On Time Performance data. This is 10 points higher than GoJet, which also had fewer flights overall.
Small Community Connections
Regional airlines – including CommuteAir – serve a vital role in many small communities, providing air links to larger cities and beyond. More than 14 small airports have lost air service completely since early 2020, according to Politico.
Even government subsidies aren’t enough to justify the cost of serving some of these communities. In 2022, the largest regional airline in the country – Skywest – petitioned the DOT to reduce air service at 29 airports under the agency’s Essential Air Service (EAS) program, citing operating costs among other factors.
In 2021, United announced it would cut flights to 11 airports of which CommuteAir only regularly flew to three. Per Cirium Diio data, none of those routes have been resumed so far. CommuteAir did not confirm if the addition of the E170 would help restore some air service.
John Sullivan, who is CommuteAir’s Co-Founder and Executive Chairman, has 45 years of experience in the regional airline sector. He was also at the airline’s Houston hangar for the E170’s arrival.
“I think some 20 percent of communities have lost service in the last five years. And some of them lost all their service. Some of them have lost frequencies,” Sullivan told AirlineGeeks while discussing pilot constraints in the industry. “But nonetheless, it’s a tremendous blow to the economic engine of the country when that happens. And I think eventually it’s going to sort itself out because the people in Congress who have lost service in their communities are starting to push in the opposite direction.
With a new aircraft in tow and relatively strong operating performance compared to its peers, CommuteAir is thinking for the future as the regional airline sector navigates a presently turbulent sky.
“I couldn’t be more proud to be part of this team,” Hoefling added praising his team. “They made this moment happen and they’re the ones that are making our long-term future much brighter.”
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