Wholly Owned Regional Carriers
#1
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Wholly Owned Regional Carriers
American used to own the entirety of its regional operation, Eagle; Northwest owned Compass; Delta owned Comair. Continental had ExpressJet. American still has a few wholey owned regionals. Alaska has Horizon. Given consolidation has largely run its course at the mainline level, why doesnt United think about bringing a leading express operator in-house? This would have the benefit of potentially easier pilot recruitment (i.e. start at a Regional with a clear path to mainline), and it would allow United to better control the customer experience. This subsidiary would still have to compete for the flying, just like Samsung semiconductor has to bid for a place in Samsung electronics phones.
Skywest is likely too big and works with everyone but bringing regional flying back under the United umbrella seems it would make more sense than not from an operations perspective.
What do you all think?
Skywest is likely too big and works with everyone but bringing regional flying back under the United umbrella seems it would make more sense than not from an operations perspective.
What do you all think?
#2
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I think that only United can determine if it makes business sense. Thus far, they haven't. I don't see it making a whit of difference to the consumer.
#3
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A lot of the reasons not to own region / express carriers has been related to the lower cost / salary structures of regionals which would be hard to have in a single company with unified labor contracts. Possiblily owned by the holding company but still operated by a seperate legal entity, as a many of the European and Asia carriers do might be an approach if that does not creat too big of a labor issue.
and in the news, from the United planning $3B share repurchase thread
and in the news, from the United planning $3B share repurchase thread
and now there's word that they're looking at buying back ExpressJet after they sold it off years ago to pad their coffers
https://seekingalpha.com/news/331729...=45#email_link
https://seekingalpha.com/news/331729...=45#email_link
#4
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This. I'm not sure what difference it would make to a customer, and I'm not sure it would really be any better control of the customer experience. In terms of employees, it's really a mixed bag - generally all are at least average, but I've seen great crew members/employees of SkyWest, GoJet, etc. and terrible UA ones (and vv.). Maybe there are benefits or disadvantages to UA itself, but I don't think customers would know either way (nor care).
#5
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CO sold off ExpressJet and its Copa stakes to keep union pensions funded. It treated them as financial investments and used the positions to raise cash when necessary.
#6
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I think ten years of mainline/express transactions have proven that carriers reject the OP's suggestion.
smb12 mentions CO selling off ExpressJet.
Delta sold Mesaba and Compass, and wound down Comair.
Alaska had Horizon as its sole express carrier and added SkyWest.
Carriers control the customer experience through brand standards, contract negotiation, and contract enforcement. Is the OP familiar with how few Marriott-family and Hilton-family hotels are actually owned by Marriott or Hilton?
It seems that AA/DL/UA like having multiple carriers to bid for flying. OP should check a good dictionary - I recommend Oxford American - for the definitions of whipsaw.
smb12 mentions CO selling off ExpressJet.
Delta sold Mesaba and Compass, and wound down Comair.
Alaska had Horizon as its sole express carrier and added SkyWest.
Carriers control the customer experience through brand standards, contract negotiation, and contract enforcement. Is the OP familiar with how few Marriott-family and Hilton-family hotels are actually owned by Marriott or Hilton?
It seems that AA/DL/UA like having multiple carriers to bid for flying. OP should check a good dictionary - I recommend Oxford American - for the definitions of whipsaw.
#8
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Granted there is discontent with the present situation but a wholly own subsidiary will likely increase the tension.
This is, by far, the biggest barrier. Unclear if there would be financial benefits integrating these regionals. Having multiple regionals to bid against each other seems a better financial situation.
#9
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There is an industry pilot shortage, so pilots are able to be a little picky with where they work. With AA regional airlines (PSA, Envoy, Piedmont), pilots are able to eventually move from the lower paying regional carriers to the higher paying mainline parent company over time, making those regional carriers more attractive for prospective pilots. Additionally, airlines can cut costs by owning a regional airline. UA can afford to purchase more fuel efficient planes and some company positions and jobs can be shared between UA mainline and UA regional.
#11
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United owns a large stake in Commutair.
#12
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Majors are back in the game of investing their ample free cash in regionals due to relatively low valuations and the need to ensure: a) reliable feeder networks for the mainline systems and b) flow of pilots to fill new-hire classes.
Guaranteed interviews and flow-through are good incentives for new pilots who often find themselves in the position of choosing between several offers from different regional carriers.
Guaranteed interviews and flow-through are good incentives for new pilots who often find themselves in the position of choosing between several offers from different regional carriers.