Regional aviation is not an unchanging concept; it assumes different forms in various parts of the world. The most commonly recognised regional carriers, especially in North America, are feeder airlines. They operate under contract with major airlines and deliver passengers from surrounding locations to the nearest hub. Such regional ventures are often the only source of commercial aviation for communities without sufficient demand to attract mainline service. They are highly dependent on their dominant partners and sink or swim along with them. On the other hand, Europe and other parts have large independent regional airlines that are neither owned by, nor primarily contracted to, a major carrier. They operate point-to-point service under their own brand, sometimes with over 100-seat jets, connecting mainly medium and large cities, even flying internationally. Independents transport a third of all regional traffic in the world. In some countries like India, however, all scheduled flights to small or remote destinations are termed regional aviation.

The regional jet revolution of the last 20 years or so was sparked by small planes like Bombardier’s CRJ200 and Embraer’s ERJ-145. They made flying even with limited passengers viable. However, post-9/11 recession, their operating costs became prohibitive. Since the global economic crisis in 2008, many airlines are in dire straits. Passenger demand is static or falling, operating costs are rising, especially on account of high fuel prices, and governmental regulations are getting more stringent. Regional airlines, the small ones in the industry, have it even tougher.

American Angst

According to Flightglobal, about 96 per cent of all North American regional traffic is flown by captive or feeder airlines, carriers owned by or flying under contract for a major airline. Independents are practically non-existent. According to the US Regional Airline Association, 50 per cent of the nation’s passenger flights amounting to over 13,000 flights daily are operated by regional carriers. America is where regional feeder airlines popularised the hub-and-spoke model from the 1980s. But now because of the financial crisis exacerbated by high fuel costs, regional carriers are in trouble. Small regional carriers face especially grim prospects because they are heavily dependent on their major partner’s fortunes.

Most major airlines are struggling to cut costs and are concentrating on their more lucrative long-haul routes to the detriment of low-traffic regional operations. They are pressurising their regional partners to phase out 50-seat jets that have some of the highest per-seat costs in the industry. Relations between the major carriers and regionals have reached such a point that it is doubtful many regional ventures will even survive. In desperation, regional airlines are bidding against each other for contracts from the major carriers. In a classic race to the bottom, many like Comair and Colgan Air, have already become defunct while others may be on the way. The number of small cities served is also dropping steadily. Within a decade, as many as 100 small and remote cities in the United States may lose scheduled commercial service altogether.

A fresh problem is looming due to new Federal Aviation Authority (FAA) regulations, effective January 2014, specifying that pilots must have 1,500 flight hours to become first officers. Although the rule applies to all commercial airlines, regionals are likely to be the worst affected because perhaps 3,000 of their more experienced pilots may be hired by the mainline carriers consequent to the new rule. Some experts conjecture that the existing regional airline model may already be broken. The only way for regionals to survive would be for them to return to their roots, fly independently and provide air service to small markets that have been abandoned by major airlines.

Europe’s Woes

European commercial aviation is also hard hit on account of the global economic crisis and fuel price rise. Flights have been severely slashed because of falling demand. LCCs like Ryanair and EasyJet are rushing to take over as many routes as possible, in the process expelling regional airlines from their natural domain. Since 2008, about a third of all regional carriers have been driven out of business. They include as many as half of the new regional airlines—a frightening mortality rate by any yardstick. Competition from other modes of transport like high-speed rail is also increasing.

Regional carriers are attempting to cope by dumping their small jets and moving to higher-capacity aircraft, including turboprops, as quickly as possible. These help to distribute fixed costs over a higher number of seats. That is why the regional jets of choice nowadays are the Embraer E195 and Bombardier CRJ900 with more than 90 seats. For shorter flights with lower traffic, slightly smaller turboprops like the ATR 72-600 or Bombardier Q400 NextGen are preferred. Since many more European cities are within the range of regional aircraft than in North America, European regionals fly more point-to-point routes and rely less on feeder contracts with the major airlines.

And there are still a few countries like Russia where small pre-owned jets have a market. RusLine, for instance, is one of several small Russian carriers that are expanding rapidly in a market characterised by high growth and relatively high yields. They prefer to buy regional jets like the 50-seat CRJ200, which they can obtain at knockdown prices from the US carriers desperate to switch to larger jets. The high operating costs of these jets are offset to some extent by low acquisition costs. And they are ideally suited to many routes not yet ready for large regional jets or narrow-body aircraft.

Advantage Asia

Meanwhile, the global centre of gravity of aviation is shifting gradually towards Asia. In about 20 years, the Asia-Pacific region and China are predicted to become the largest aviation market in the world, accounting for around a third of global revenue passenger kilometres (RPKs). RPK is a measure of traffic calculated by multiplying the number of revenue-paying passengers by the distance flown. Regional aviation has been slow in making an impact in various Asian countries because of inadequate infrastructure and the marked preference of many airlines to operate on inter-metro routes. However, with the advent of LCCs like AirAsia and its subsidiaries, there’s increasing emphasis on taking aviation services to remote and underserved destinations.

Already, according to SkyTrax, half of the world’s top ten regional airlines are Asian. Hong Kong-based Dragonair was recently chosen as the “World’s Best Regional Airline” as part of SkyTrax’s prestigious World Airline Awards 2013, in which more than 18 million airline passengers from around the world were polled for their travel experiences. Dragonair, a wholly owned subsidiary of Cathay Pacific, operates a fleet of 39 standard narrow-body jets and serves 45 regional destinations in 14 countries and territories across Asia. Bangkok Airways, ranked third, is a regional airline that operates scheduled services to destinations in Thailand and neighbouring countries. And SilkAir, ranked fourth, is the regional wing of Singapore Airlines, and serves many shorthaul destinations in the Singapore Airlines Group network.

In China, limitations of infrastructure and inadequate air traffic management services force the airlines to use standard narrow-body jets of around 150 seats even on routes with limited demand. But the number of regional aircraft is increasing because many carriers now realise that even if they cannot make money on regional routes, at least the losses on account of empty seats will be smaller with small planes. However, price wars and competition from high-speed trains are making life difficult for regional carriers.

In the Indian market too, regional aviation is grossly underserved because of the airlines’ fondness for planes with a capacity of 180 seats or more flying on inter-metro routes. While the regional space is filled to some extent by the major carriers, there have been several unsuccessful attempts to launch specialist regional airlines. The most recent example was Delhibased Air Mantra which launched operations in July 2012 with two small 19-seat turboprop aircraft, but was unceremoniously wound down in April this year. The country has a long way to go in successfully establishing regional aviation.

Most aviation headlines these days feature Middle Eastern airlines as they are expanding at a rate well above the global mean. Regional aviation too is doing well, thanks to adequate funding and tight capacity management. Kuwait-based Jazeera Airways, for instance, has a strong regional focus with most destinations within less than two hours flight time. It concentrates on yield first and growth second so as to ensure consistent profitability.

Although they serve a vital purpose, regional ventures may have only limited opportunities in emerging economies because of their high operating cost per seat and because passengers are not averse to taking surface transport for short distances to save money. In many countries, regional carriers survive only with government financial support designed to enable them to serve remote areas more effectively. But as urbanisation spreads and incomes rise, air travel becomes less of a luxury. There’s bound to be increasing demand for regional aviation services and enough passengers at least to fill small planes. Independent regional carriers operating mainly point-to-point flights with low per-seat costs and limited competition from other airlines may be the ones best placed to prosper. They also need to focus on profit ahead of growth.