Chapter 1898： Regional airlines are not easy to mess with

The Hawaiian Island Airlines acquired by Yang Cheng from Larry Ellison and the Hawaiian Airlines acquired directly later are actually regional airlines.

In the United States, the role of regional airlines is very important. Of course, the unique operating model also ensures the profitability of regional airlines.

Take Skywest Airlines as an example. As the leading regional airline in North America, its cooperation with other major U.S. trunk airlines includes capacity purchase agreements and revenue sharing agreements.

Tianxi Airlines accounts for approximately 80% of its revenue through capacity purchase agreements. The capacity purchase agreement, also known as the hosting agreement (CPA), is similar to wet lease, except that the aircraft identification and service methods are different.

CPA refers to a business model in which large network, full-service airlines purchase capacity from small airlines or regional airlines.

Mainline airlines can pay a fixed fee to the company based on the number of flights completed by regional airlines, flight time, block time, and the number of aircraft in service each month, and directly pay or compensate for specific direct operating costs.

In addition, the service quality is generally evaluated by third-party agencies. If the service quality does not meet the standard, the rent will be reduced, which will prompt the regional airlines to continuously improve the service quality.

Similarly, if the service is done well and the passengers are satisfied, additional rewards will be provided based on the flight completion status, punctuality rate and other operating indicators.

In addition, another advantage is that mainline airlines bear the risk of fuel price fluctuations and other expenses, and regional airlines can avoid financial fluctuation risks such as ticket prices, number of passengers and fuel prices.

Of course, regional airlines will not benefit from ticket revenue, ancillary revenue (such as baggage and meal expenses), number of passengers, and fuel price fluctuations.

This model realizes the connection of the regional flights of the US trunk airlines, eliminates the risk of operating the regional routes, and brings more flexibility.

In addition, since the LOGO of the aircraft has been changed to mainline airlines, for example, Tianxi Airlines serves Delta Air Lines, then the LOGO of the aircraft has been changed to Delta. Through the brand effect of Delta Air Lines, more passengers can be attracted to take Tianxi Airlines. Transit.

At the same time, if there is a safety accident, American Tianxi and Delta can clarify the ownership of safety responsibility according to the terms in the signed cooperation agreement.

Another form of cooperation is a revenue sharing agreement. Under this cooperation agreement, mainline airlines and regional airlines distribute fare revenue on a specific route based on formula ratios.

According to the agreement, the regional airlines can share a portion of the revenue from the regional segment ticket and a portion of the revenue from the trunk segment. When a passenger only takes the regional flight, the regional airline receives all of its fare.

Therefore, even if the current global crisis, such as wars, disasters, etc., has caused the revenue of some major airlines in the United States to suffer, regional airlines such as Tianxi Airlines can still achieve profitability, and the number is not less than before. How many!

Because Sky West Airlines’ routes are not affected by international bans, as long as the US domestic flights are allowed, they will earn money. On the other hand, Sky West Airlines and major airlines operate on the basis of signing contracts. The model is almost equal to "guaranteed income during droughts and floods", and a fixed profit can be obtained in accordance with the contract.

For example, West Air has signed capacity purchase agreements with four mainline airlines including Delta today, namely CPA, which carries approximately 40 million passengers annually.

This mode of operation allows Tianxi Airlines to have a large fleet of 483 aircraft, accounting for 19.6% of the industry's capacity. Become the largest branch line leading company in the United States for regional aviation.

Among them, the number of aircraft serving Delta is 199, United Airlines is 193, and the rest are only a few dozen. Together, they are not as many as Delta or United Airlines.

Among them, there are more than 400 aircraft in the form of capacity purchase agreement cooperation, accounting for more than 80%, and the rest are in the form of revenue sharing agreement cooperation.

Skywest Airlines' main base airports are all over the country, including Chicago, Denver, Houston, Los Angeles, Minneapolis, Phoenix, Salt Lake City, San Francisco, and Seattle.

Among them, the cooperation between Skywest Airlines and Delta Airlines mainly revolves around hubs such as Minneapolis, Detroit, Salt Lake City, and Atlanta.

Compared with the cost control capabilities of low-cost airlines, regional airlines are obviously better in this regard. Like low-cost airlines, regional airlines reduce operating costs through a single model. The difference is the type of operation. The low-cost airline is generally Boeing 737. For regional aviation, there are mainly two-cabin layouts of 85 seats and 76 seats, and two-cabin layouts of 70 seats and 50 seats. The models are mainly CRJ and ERJ series aircraft, and each family is basically concentrated. Operation of 1-3 models.

In general, the biggest advantage of regional aviation is stable cost control and stable profit model. As long as there is no catastrophic natural disaster, regional aviation can at least guarantee a decent life, and it will definitely not lose money to the pants.

Compared with Skywest Airlines, which is relatively close to Delta, Mesa Airlines has a shorter time to rise, and it has a closer relationship with American Airlines and United Airlines. It belongs to the kind of pig standing on the wind, riding on the wind. And it has advantages that many competitors don't have, making it bigger and stronger is already at your fingertips.

Although Mesa Airlines has really gained fame in recent years, in fact they have had a cooperative relationship with US Airways for decades, and after the merger of American Airlines and US Airways, New American Airlines maintained this cooperative relationship.

Of course, this also makes Mesa Airlines instantly become a close partner of the world's largest airline, which is of extraordinary significance. It is this partnership that provides Mesa Airlines with development opportunities and allows it to dare to expand its fleet.

Unlike American Airlines, United Airlines resumed its cooperative relationship with Mesa Airlines by providing 30 E175 aircraft.

This is also the first time that United Airlines has purchased a regional aircraftMesa Airlines attaches great importance to the development of this relationship and calls this the second key point of its turning development.

From 2013 to the present, Mesa Airlines has doubled its scale of operations and added more than 1,000 jobs. According to the current operating plan, Mesa Airlines will need 700 cabin service personnel and 500 pilots in the next three years. , Is completely rushing to build the world's top regional airline.

Moreover, Mesa Airlines now looks impeccable. Through bankruptcy and reorganization, Mesa Airlines’ internal structure is more reasonable and costs have fallen sharply. Before the financial crisis, the company had more than 200 aircraft and more than 5,000 employees, and when they came out of bankruptcy protection Later, the company had fewer than 70 aircraft, and its debt was reduced by approximately US$700 million.

With the gradual recovery of the market, Mesa Airlines' fleet has been rapidly expanded, and the aircraft equipped with it have become more advanced and fuel-efficient, giving it a stronger competitive and comparative advantage in the market.

And Mesa Airlines has a good management team and many outstanding employees.

From the inside to the outside, Yang Cheng couldn't find room to start.

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