Over the years American Eagle COO Bob Reding has come to appreciate the virtues of order, simplicity and balance–whether they apply to flying the line or in directing flight operations and maintenance for the world’s largest regional airline. An ATP-rated Boeing 737 and DC-9/MD-80 pilot and former CEO of Canadian Regional Airlines and Reno Air, Reding has navigated around the pitfalls of the airline business for the past two decades, through it all maintaining a regard for flexibility within the confines of a defined organizational structure.
Reding began applying his tried-and-true management principles at American Eagle in March last year, shortly after the Dallas-based regional began the process of absorbing Business Express Airlines. Today, the former Air Force officer and flight examiner has turned his attention to preparing for the delivery of 25 CRJ-700 regional jets and rapid expansion on the East Coast. Reding found a few moments this summer to talk with AIN at American Eagle’s DFW headquarters.
When you became American Eagle’s COO last year, what were some of the challenges you wanted to address?
The major challenge was running an airline of American Eagle’s size. It is a large airline, with eight hubs at Dallas/Fort Worth; Boston; Chicago O’Hare; New York La Guardia and Kennedy; Miami; Los Angeles; and San Juan, Puerto Rico. Three of those hubs–Chicago, Los Angeles and Boston–are very constrained. We were also busy integrating the operations of Business Express at Boston, which we accomplished last December. And, of course, there was the challenge of replacing a large portion of our turboprop fleet with regional jets.
During the past year we have put in a tremendous amount of work to improve reliability and to allow American Eagle to expand. One of the things I did was to establish a fleet simplification program. We went to an all regional jet fleet at O’Hare, and all ATR fleets at Miami, which had a combination of ATRs and Saab 340s. At Chicago we ended all Saab 340 operations. We simplified the operation to a single fleet type at two of our largest hubs, which optimized the operation.
I also reorganized maintenance under three separate vice presidents. Ty Cross, vice president of line maintenance, is responsible for overnight and daily line maintenance.
Blair Gregg, vice president of inventory and base maintenance, supervises heavy checks, inspections, repairs and modifications. He also oversees our three major maintenance facilities–Eagle Aviation Services in Abilene, Texas, which does major inspections on Saab 340s and regional jets; Regional Airline Maintenance Center in Marquette, Mich., which services our ATRs; and Wings West Aviation Services in San Luis Obispo, Calif., which is a Saab 340 shop.
Chris Oot, vice president of technical services, is in charge of all support functions, including maintenance training, quality control, engineering services and publications.
These people have clearly defined responsibilities. We no longer have a single vice president of maintenance who has to manage everything.
Will American Eagle become an all regional jet carrier?
There are no plans right now to phase out all turboprops because there are markets in which they are crucial. For example, unlike most regional jets, our ATR 42 and ATR 72 turboprops can handle large amounts of cargo and baggage. This is especially important for our flights out of Miami and San Juan, which go mainly to leisure destinations in the islands. People traveling to leisure destinations tend to take along a considerable amount of baggage.
This is not to say we won’t use jets at Miami or Puerto Rico, but we will continue to operate ATRs from those hubs for the foreseeable future.
By the end of next year we will operate about 150 regional jets and 150 turboprops, with about half of those jets replacing turboprops and the other half for route expansion.
Eagle operates 30 ATR 42s, 43 ATR 72s and 104 Saab 340Bs. Given those numbers, how will the turboprop fleet be drawn down?
Most of the reductions will come from the Saab 340 fleet. Last year, for instance, all of the Saab 340s that had been operated by Business Express were returned to the leasing companies. But we replaced those airplanes with other Saab 340s that came from our own fleet. In addition, we sold two Saabs from the American Eagle fleet to Chicago Express, which has options on three more. We also have proposals out to other operators to dispose of additional Saabs.
Over the next five years we are planning to phase out 20 turboprops per year. Along with Saab 340s, this could include the ATR 42s. We see ourselves keeping some Saab 340s and the ATR 72 fleet. Under current planning, the Saabs we want to retire will leave the fleet first, with the ATR 42s going out when their leases expire.
Your regional jet fleet as of June included 55 Embraer ERJ-145s and 40 ERJ-135s. But Eagle also ordered 25 Bombardier CRJ-700s. As a large Embraer customer, why did you order new aircraft from Bombardier, and when will the deliveries commence?
We will take delivery of our first CRJ-700 in late summer. We expect to have three before year-end and eight more next year. After that, the aircraft will be delivered at a rate of one per month until all 25 have been delivered.
The CRJ-700 offers us two things that the Embraer jets don’t–70 seats and greater range. The additional seating means that we can serve more markets that have a greater traffic density. That will give us a lower cost per seat mile in those markets.
As American and its pilots look to negotiate a new contract, what effect could that have on your ability to operate the CRJ-700s or any other regional jet in the 70-seat range?
The current scope clause between American Airlines and the Allied Pilots Association limits us to 67 regional jets in the 45- to 70-seat range. Below 45 seats, the amount that we can operate depends–to some extent–on the growth of American Airlines’ fleet. But given American’s expansion, we are pretty much unlimited as to the number of regional jets with fewer than 45 seats.
This is why we operate 40 Embraer ERJ-135s, which have 37 seats, and why we placed an order for 139 ERJ-140s, which have 44 seats. We expected to receive our first ERJ-140 late last month, immediately following FAA certification of the aircraft (it received Brazilian certification in mid-June).
By the end of last month we will have taken the final delivery of a 50-seat ERJ-145, giving us a fleet of 56 of those. When you combine that with the 25 CRJ-700s on order, that will give us a total of 81 jets with more than 45 seats. To comply with the scope clause we negotiated a turn-back deal with Embraer under which we’ll trade in some of the 50-seat ERJ-145s for ERJ-140s. This way we will be able to stay within the scope clause while increasing our under-45-seat regional jet fleet.
What is the schedule for the deliveries of the 139 ERJ-140s now on order?
We took delivery of the first aircraft in July. Then we’ll take delivery at the rate of three per month. We have firm orders and options extending through 2007 for the ERJ-140.
You are building up a heavy schedule of regional jet flying from the Raleigh-Durham International Airport to the Northeast, specifically to Washington, Philadelphia, Boston, New York and Newark. Does this mean that American Eagle and American Airlines are gearing up to restore Raleigh as an American Airlines hub, which existed there before the mid-1990s?
Our growth at Raleigh-Durham is mostly oriented to regional jet flying, though I agree that American has upgraded some service there with an additional frequency to Chicago O’Hare. It has also replaced a Boeing 767-300 with a 777 for the Raleigh-Durham to London-Gatwick route.
We recognize that Raleigh-Durham represents a heavy business travel market that demands a high frequency of service, and we are meeting that demand with the regional jets. Raleigh-Durham will evolve into a hub more for American Eagle, much as New York La Guardia, where we have a very large regional jet operation.
You mentioned that the old Business Express operation was fully integrated into American Eagle at Boston in December. Now that this has been done, what opportunities do you see to build on that?
We recognize that any growth there at this time will be constrained due to the large number of construction projects at Logan International Airport. One of those projects is ours. We acquired the old Signature Flight Support facility at Boston and are totally rebuilding it. This will add another four to five gates to our operation, for a total of about 14 gates.
This will give us two terminals at Boston that will be linked continuously by a shuttle bus. We expect to have the new terminal at Boston ready for operation this month.
Eagle just started service to Mexico, providing regional jet trips between Dallas/Fort Worth and Saltillo and Aguascalientes. Why were those two destinations chosen, and will we see more American Eagle service into Mexico?
Saltillo and Aguascalientes were selected due to heavy demand by our major corporate customers who do a lot of business in those two cities. And yes, we will continue to look at more opportunities in Mexico, but mainly in business markets. The leisure-type markets in Mexico tend to be low yield. However, if our planning with American indicates that there will be considerable connecting opportunities between some of Mexico’s leisure destinations and any of American’s hubs, we won’t preclude serving those destinations.
Where else will American Eagle expand?
There will be continued growth at many of our hubs with the jets. Much of that will be at Boston, Dallas/Fort Worth and Raleigh-Durham. We will probably use the CRJ-700 to replace some ATR 72 flights, as well as to provide longer-haul nonstops, mainly in markets from Dallas and Chicago. Along that line, Dallas/Fort Worth will be the initial CRJ-700 service when that type enters the fleet.
The U.S. ATC system is in dire straits, with delays and cancellations all too common. How does this affect Eagle’s growth plans, especially as you continue to fly in more congested airspace, such as Raleigh-Durham to New York?
We recognize that our East Coast to Northeast service is more affected by air-traffic issues than many of the other places we fly. Still, we have to keep in mind that we are mainly a feeder to American Airlines’ market, and that most of our customers are business travelers. So we are providing a service to where our customers say they want to go, but knowing what the ATC situation is, we are taking a proactive approach to scheduling that takes this into consideration.
What are some of the proactive measures you’re taking?
We are installing GPS-based navigation systems on all of our jets and ATRs to work in the ATC system with greater flexibility. We are also participating in low-altitude departures, even though it means greater fuel burn, and we are a partner in land-and-hold short operations. We are also taking measures that optimize routes, departures and arrival profiles to take some of the strain off the system.
With all of the expansion taking place at American Eagle, what changes are taking place for training pilots, flight attendants and mechanics?
We have made tremendous strides at our American Eagle Training Center at DFW. We have obtained state-of-the-art simulators, and computer-based system trainers for our pilots and flight attendants. For new-hire and upgrading of pilots we are using the same training devices and processes that the major carriers employ.
Also, we are doing mechanic line training in the flight simulators. This gives the mechanics better training for taxiing the aircraft and working on abnormal engine startups.
Has it been especially challenging to find pilots? If it has, what changes have been made to attract qualified people?
The experience level of our new-hire pilots has dropped over the past couple of years, to between 2,000 hr and 2,500 hr, but despite this the quality of the pilots has been excellent. This is because we have partnered with a number of schools that offer excellent aviation degree programs and dedicated instructors. The pilots graduating from these programs–and others we have hired–are coming in with performance levels comparable to some of the pilots who came to us with 5,000 to 10,000 hr.
Do the pilots you are hiring from the programs actually come with 2,000 hr to 2,500 hr, which you said is the average for a new-hire pilot now?
No. The minimum total time that most pilots we hire must meet is 1,000 hr, but the pilots we are hiring from the partner schools are actually coming in with slightly fewer hours. We have added more ground school and simulator time to take these lower experience levels into account. But we are pleased with the success of our new-hire pilots.
I want to add another thing about our involvement with the partner schools. We have an internship program at American Eagle offered to students at those schools in their junior year. Basically, the students will spend a summer at American Eagle at various areas of the operation.
Regional airlines traditionally have had a heavy turnover of pilots. Has the flow-through agreement with American Airlines kept your pilot attrition rate small?
The truth is that American Eagle probably has the lowest pilot attrition rate among the regionals. And we do provide the option to flow through to American Airlines, if the pilot wants it. Under the program, once the pilot upgrades to check captain at American Eagle, he will then get an American Airlines seniority number. Within two years the pilot can go to American if he wants. But many of our pilots stay with American Eagle by choice.