Airport Experience News Fall 2022

ULCC’s Expand Flying To Left-Behind Markets BY C AROL WARD Smaller communities in the U.S. market remain vulnerable to loss of air service as the legacy carriers continue to shed 50-seat aircraft from their fleets. None of the major U.S. airlines have orders for more 50-seat planes, and all have been signaling their exit from that business for the past half dozen years or more. The situation is exacerbated by the pilot shortage. The regional carriers that fly those smaller jets, often on behalf of the legacy carriers, are the group that is experiencing the pilot shortage most acutely. Pilots are being

Swelbar predicts the regional sector will continue to shrink. “Today American, Delta, and United have the maximum number of these larger regional jets flying per the scope agreements with their mainline pilots,” he says. “I do not see this number being increased as it is deemed a concession by the mainline pilots to further relax the number of permitted larger aircraft. “So there will be regional airlines for the foreseeable future flying the large regional jets,” Swelbar continues. “There will be some EAS providers. But the regional industry as we knew/know it will never be what it was.” EAS Vulnerability The Essential Air Service program could be vulnerable in the current climate as well. The Essential Air Service (EAS) program was put into place to guarantee that small communities that were served by certificated air carriers before airline deregulation maintain a minimal level of scheduled air service. The U.S. Department of Transportation currently subsidizes flights serving approximately 60 communities in Alaska and 115 communities in the lower 48 contiguous states that otherwise would not receive any scheduled air service. While many EAS markets are truly remote, others are within a couple hours’ drive to the nearest hub airport. Swelbar anticipates that the program parameters will need to change going forward. “Given where the smaller aircraft providers are in terms of skilled workforce – pilots and mechanics – it is hard to imagine a scenario where all EAS flying today can be provided two years from now,” he says. “In my view, it is a program that needs to be re-imagined. “There are obvious needs for the program in states like Alaska, Wyoming, Montana and others,” Swelbar continues. “However more than 50% of the monies spent on the program are to subsidize service from an airport that is within 120 miles of a larger airport. These airports now have service less than two times per day to a connecting hub airport.” Noting that the EAS program came about before the interstate highway system was completed, Swelbar suggests the U.S. “redefine what is essential” now. “I think what’s essential is training people - training pilots, training mechanics, training dispatchers, training air traffic controllers,” he says. That’s what is essential to get the system moving again.”

tapped to fly larger planes for the regional carriers or to move to a legacy carrier’s mainline operations. With not enough pilots in the system, the smaller jets serving smaller markets get squeezed. But some smaller airports are getting a service boost in the form of ultra-low-cost carriers (ULCC), which in recent years have been populating smaller markets at a notable pace, according to William Swelbar, chief industry analyst at Swelbar-Zhong Consultancy ,

“The ULCCs have a large presence in small hub airports where they serve 68 of the 75 airports in the category,” says Swelbar. “In addition, the ULCCs serve 61 airports classified as nonhub airports by the FAA.” All Service Not The Same Small communities have historically struggled to attract adequate air service to their markets, and are constantly lobbying for new service or new routes. It’s not surprising, given that the communities’ economic prospects are on the line. Some small markets are seeing their service shift, with repercussions. With ULCCs replacing service that was previously provided by network carriers or their regional partners, some connectivity is lost. ULCCs typically fly point to point and have little or no easy access to a larger network. “For many of the smaller airports, the highway will be the first access mode to a larger airport with connectivity for sale,” Swelbar says. He adds that for about 100 airports in the U.S., ULCCs may provide the only option for air service. “The ULCCs provide very different service and the other end of the itinerary they offer is a destination with leisure attributes,” Swelbar says, noting that ULCCs typically only fly a couple of times a week from smaller airports, compared to network service that often offers at least one or two per day. Overall enplanements will likely fall as a result. “However, it will prove to be the very best chance in the medium term to have commercial service at all of the 100 airports we see as vulnerable to losing their service from either American, Delta, or United,” he adds. William Swelbar

Small Hub: Domestic O&D Traf c Share (2000, 2019, and 2021)

Small Hub: Domestic O&D Traf c Share (Percentage Points Change 2000-2019)

20%

Legacy

Southwest

15.2%

15%

16.5%

68.9%

13.9% 13.5%

57.8% 56.1%

10%

5%

2000 2019 2021

2000 2019 2021

2.6%

0%

ULCC

Hybrid

Other

-0.4%

18.4%

7.0%

16.6%

-5%

11.4%

-6.3%

8.8%

8.6%

-10%

0.7%

1.4%

0.3%

-11.1%

-15%

2000 2019 2021

2000 2019 2021

2000 2019 2021

Legacy

Southwest Hybrid

ULCC

Other

31

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