The trend toward consolidation and alliances among major airlines may concern some in the Justice Department, but it hasn’t restricted opportunities for regional carriers such as SkyWest Airlines, which last month inked its first code-share deal with US Airways.
United Airlines completed a series of moves last month that signaled not only its intention to embark on a large-scale expansion of its regional network, but perhaps a willingness to play “hard ball” with its long-time United Express affiliate, Sterling, Va.-based Atlantic Coast Airlines.
United Airlines has signed a memorandum of understanding (MOU) with SkyWest Airlines to operate select portions of the company’s United Express service. The MOU, announced June 10, signals an 11-year relationship that includes a new rate structure and allows for more airplanes to be added to the United Express fleet. It also calls for SkyWest to operate a total of 140 aircraft.
While the traffic slump that beset the U.S. airline industry as a result of September 11 certainly manifested itself in fourth-quarter financial results across sector lines, an ability to adapt quickly to changing market conditions mitigated the damage to the regional airline business, which showed remarkable resilience in the face of potentially devastating losses.
SkyWest last month withdrew its offer to buy Houston’s ExpressJet after concluding that a new seven-year capacity purchase agreement entered by ExpressJet and Continental Airlines rules out any deal. “Although we continue to believe our offer represented a favorable opportunity for ExpressJet stakeholders, the execution of a new ExpressJet capacity purchase agreement removes a fundamental component of our offer,” said SkyWest CFO Brad Rich.
A committee composed of independent outside members of Houston-based ExpressJet’s board of directors unanimously rejected a proposal from St. George, Utah-based SkyWest to acquire the company for $3.50 per share in cash in late April.
The major reductions in airline passenger traffic at San Francisco International Airport (SFO) since September 11 may actually benefit business aviation activities at the airport, as well as SkyWest Airlines, the sole regional airline operation remaining at the large West Coast airport.
Air traffic controllers at San Francisco International Airport (SFO) are already hailing the airport movement area safety system (Amass) as an aviation success story after it alerted them to a potentially hazardous situation involving a business jet and a regional airliner on one of SFO’s runways.
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.
Shortly after announcing plans to accept delivery of another 10 ex-Comair Canadair Regional Jets, St. George, Utah-based SkyWest Airlines negotiated a revision to its code-share contract with Delta Air Lines that will allow it to fly exclusively under a fee-per-departure arrangement.