Regional Jet Resurgence Buttressed by United-Embraer Deal

 - May 6, 2013, 11:15 AM
United Airlines expects the first of 30 Embraer E175s to enter service with one of its regional affiliates early next year. (Image: Embraer)

Another sign of what Embraer CEO Frederico Curado has characterized as a resurgent regional jet market appeared last week, when United Airlines inked a firm order for 30 of the Brazilian manufacturer’s E175s. The deal, which includes options on another 40 of the 76-seat airplanes, marks the first move by United to exploit its newfound freedom to alter the composition of its regional jet network since its pilots agreed to relax the scope clause in their labor contract last December. Since then both Delta Air Lines and American Airlines have committed to 76-seat regional jet flying as well, following similar modifications to the scope clauses in their pilot contracts.

Plans call for the 76-seat airplanes ordered by United–configured to carry 12 passengers in first class, 16 in so-called Economy Plus and 48 in standard economy–to replace some of the 50-seat regional jets in the United Express fleet, a majority of which consist of Embraer ERJ-145s operated by former Continental Express carrier ExpressJet. United expects deliveries to run from the first quarter of next year into 2015, but it hasn’t revealed which partner or partners it has chosen to fly the airplanes.

According to United, the E175s will burn 10 percent less fuel per seat mile and emit less carbon dioxide per seat than the 50-seaters they replace.

The new scope clause at United, part of a pact that finally allowed UAL’s 10,000 pilots to negotiate toward a consolidated seniority list following the 2010 merger of United and Continental Airlines, allows for 255 seventy- and 76-seat aircraft starting January 1 next year. By that time, 76-seaters may account for 130 of the 255 airplanes, and by Jan. 1, 2016, the number of 76-seaters may rise to 153.

In effect, the contract allows for the addition of 80 airplanes in the 70- and 76-seat categories starting next January 1. Two years later, if United adds new small narrowbodies (defined as the Bombardier CS100, Embraer E190 or Embraer E195) to the mainline, the number of 76-seat jets at the United Express carriers may rise to 223 from 153, and the combined complement of 255 seventy/76-seat aircraft may grow to 325. Under the formula, the company may add a single 76-seat aircraft for every one-and-a-quarter mainline narrowbodies. However, any increase in the number of 76-seaters above 153 would trigger a fairly complicated formula under which the United Express 50-seat fleet, which now numbers 352, would begin to shrink.

All three of the “big three” major airlines in the U.S. have now followed through with their stated intentions to begin replacing 50-seat jets with larger models, marking the start of the next major shift in fleet composition among the country’s regional airlines. Projections cited by turboprop maker ATR show that the number of groundings of 50-seat jets in the U.S. will reach 500 over the next “few years.” As a result, according to Embraer’s Curado, U.S. regional airlines will need between 400 and 600 new regional jets in the 70- to 76-seat categories to fill the capacity gap.