This is unusual as Mesa is a regional airline that does most of its flying for major airlines under contract and until recently, the regionals have been somewhat insulated from the industry's woes. Mesa also has independent operations in Hawaii.
When airline deregulation came to pass in 1978, the playing field changed forever for the major airline companies. Competition was much more fierce for the same territory. Commuter airlines sprang up to provide an inexpensive feed to the majors' hubs. These airlines usually flew 10 to 20 passenger turboprop equipment on short journeys from smaller markets that the majors could not afford to send DC-9's and B-727's to anymore.
In the mid '90s, Bombardier of Canada introduced the Canadair Regional Jet.(RJ). This was a small passenger jet that carried 50 passengers up to 1500 miles. The aircraft looked like a small DC-9, was quiet, comfortable and was as fast as any other passenger jets flying at the time. For some reason, the majors decided to pass on what could have been an economical replacement for their current inefficient smaller jets.
CRJ-200
The commuter airlines saw an opportunity, now that the majors turned up their noses at the small jet, to offer a more attractive service to the majority of passengers who thought anything with a propeller was a relic from WWII. The major airlines saw advantages of letting the commuter airlines operate these jets on the thinner routes that they could not make money on. The pilot unions at the major airlines set a maximum of about 80 passengers that the regionals could accommodate on each of their flights.
In a few years, the commuter airlines became regionals as the majors relinquished more and more domestic flying to them. Now a passenger who buys a Delta ticket to get from KJFK to KMIA may never actually step foot on a Delta owned and operated aircraft or deal with any Delta ground personnel. It is all done by the contracted regional airline. The planes are painted the same as the major partner and most passengers will not know the difference unless they see the small logo of the regional near the embarking door...Operated By: XYZ Airlines.
It is all set up to be a seamless experience. The regionals do not have reservation agents or advertising departments. They depend on the major partner to provide passengers. All the regional does is provide an aircraft, crew and in some cases ground people to move the bags and man the gates. The majors were more than glad to turn over the less profitable routes to the regionals. The regionals could do these routes for less money because they flew more efficient aircraft and paid their employees less.
It was a sweet deal for the regional airlines, too. In almost all cases the majors agreed to pay the regionals on a "fee for departure" basis. This means that no matter if the flight was empty or full, the regional would get paid the same by just showing up and departing as agreed. The majors paid the fuel bills too! This guaranteed income is why many regional airlines flourished when the majors were tanking.
So if the contracts are so favorable to the regionals, why is Mesa filing for bankruptcy? Several reasons come to mind. First: there are a lot of regionals out there bidding for the same flying from the majors. The majors usually choose the lowest bidder. Some regionals will bid unprofitably low to keep their piece of the pie in hopes of a better future. Second: the 50 seat regional jet is no longer a money maker with oil at ~$70/barrel. The regionals with a large fleet of 50 seaters are at a distinct disadvantage to those that have the newer 70 seat variation. Third: there is talk that the majors will force the regionals to accept more "at risk" flying which means the the regionals will shoulder more of the burden depending on passenger loads and will share more actual gains or losses with the major partners.
Mesa Airlines is a victim of all three reasons and then some. They have a large fleet of unprofitable 50 seat RJ's, many which are already parked in the desert. Mesa's past performance has been lacking so they have to be a low bidder and they do not have the cash reserves to weather too much at-risk flying. Mesa has also had costly failures in China and Hawaii. I have nothing against Mesa, but they do have a certain reputation in the US airline industry.
The regional airline business is changing, it is no longer the cash cow it used to be. It's to the point that the majors can't afford to pay the regionals enough to stay profitable but cannot afford to lose the passenger feed the regionals provide. Where it goes from here is anyone's guess, but I fear it will not bode well for the traveling public in the long run.
I just read where bankruptcy is just around the corner for Japan Airlines, big news when a legacy such as this company throws in the towel!
Hello Ace,
ReplyDeleteI'm a regional airline dispatcher with 7 years experience in the industry and I wanted to ask you some questions regarding your time working in the UAE. I recently got an email from Etihad airways saying that I will be moving forward in their recruitment process, but as I read your other blog about Abu Dhabi, it's safe to say that there is quite a facade that needs to be revealed about working in the sandbox. My main question has to do with jumpseating. I have grown accustomed to going any and everywhere i want in the US and beyond with no oversight, and I want to know if that same kind of privilege is awarded to you if you work for Etihad. Can you jumpseat on their flights or any of their partner carriers freely at any time you want, or is there some kind of extensive and drawn out procedure that has to be done? Do they take away your passport when you start working there, making it harder for you to even be entered into the CASS system when you want to leave to go somewhere? Do you need the government's permission to leave in the first place? When you worked there, did you have to simply wait until your accrued vacation in order to be able to leave the country? I'm still holding out on a major airline here in the US as my final career position, but my patience is slowly wearing thin as it becomes even more competitive than ever to get a career with a major airline as a dispatcher. What would really sell me on the idea of going to get experience with a middle eastern air carrier besides the money and whatever potential adventures I could get into? I'm still young, single with no kids, in my early thirties with less than 5,000$ of debt (car payment), and enjoy a moderate thirst for adventure. Sorry if I used your airline insiders blog to post this, but as I've seen with your Abu Dhabi posts, I would rather not like to get spammed with escorts and porn links from the other comments lol. Any input from you would be greatly appreciated, I thoroughly enjoyed reading your posts, and I feel as though I could learn a thing or two from you based on your experience. Thanks, and enjoy living in Vegas.