For the first time in recent memory the U.S. regional airline industry could experience a drop in passenger boardings during the second half of this year as skyrocketing fuel costs prompt the nation’s major airlines to reconsider the use of their partners’ most fuel-thirsty assets.
Delta Air Lines
Delta Air Lines notified Pinnacle Airlines last month that it intends to dissolve their Delta Connection contract effective July 31. Delta cited Memphis-based Pinnacle’s failure to meet contractually guaranteed on-time performance rates for its decision. In late May a federal judge blocked Delta’s attempts to end its contract with Mesa Air Group’s Freedom Airlines subsidiary for the same stated reason.
Delta Air Lines has notified Pinnacle Airlines that it intends to dissolve their Delta Connection contract, effective July 31. Delta cited Memphis-based Pinnacle’s failure to meet contractually guaranteed on-time performance rates for its decision. A federal judge recently blocked Delta’s attempts to end its contract with Mesa Air Group’s Freedom Airlines subsidiary for the same stated reason.
Boeing’s planned Connexion airborne broadband data service was dealt a damaging blow last month when its three largest customers–American Airlines, Delta Air Lines and United Airlines–abruptly withdrew from the project in the face of their own fiscal difficulties. As a result, Boeing is left with no equity partners in the venture and only one customer, Lufthansa, for the fledgling in-flight Internet and e-mail service.
Northwest Airlink subsidiary Express Airlines I will move to an all-regional-jet fleet and Minneapolis-based Mesaba Airlines will provide all Northwest Airlines’ Saab 340 service in Memphis, Tenn., under a new agreement that saw Mesaba reduce its service fees to Northwest by 10 percent during last year’s fourth quarter.
All four of Delta Air Lines’ regional affiliates benefited from the company’s continuing network realignment last month, as Delta concentrates ever more intently on “rationalizing” capacity and cutting costs with regional jets.
The summer of 2001 saw regional airline executives sweating from more than the heat of the season, as 89 days of uncertainty produced by the pilots of Cincinnati-based Comair threatened to halt the growth momentum of an entire industry. Of course, the strike severely hurt Comair’s parent airline, Delta, to the tune of at least $200 million.
What was to have been a routine milk run on March 19 from Nassau, Bahamas, to Orlando, Fla., for Comair Flight 5054 turned into several moments of sheer terror when the Embraer EMB-120 Brasilia began accruing a coating of ice as it entered IMC at 18,000 ft about 46 min after takeoff.
Delta Air Lines’ “realignment” of its regional subsidiaries reached the top levels of management last month, when Delta senior v-p of strategy and business development Fred Buttrell became president and CEO of Delta Connection. Buttrell replaced long-time Comair CEO David Siebenburgen, considered by many the father of the regional jet movement in the U.S.
The profound damage inflicted by the September 11 terrorist attacks brought changes to the U.S. airline industry the most prescient observer could not have envisioned three months ago. Twenty-percent industrywide capacity cuts, furloughs and layoffs, large-scale route transfers from mainline carriers to regional affiliates and aircraft delivery deferrals have all marked one of the most volatile periods in the industry’s history.