Praising pro-rate

Hot Tub Time Machine isn’t the only outlet celebrating the, ahem, charm of the 1980s. US Regionals are heralding some old school tactics as well.

For months talk has centered on a transition from current fee for departure contracts that are the mainstay between US regionals and their mainline partners to more pro-rate deals that were prevalent in the 1980s and 1990s.

Under pro-rate deals regionals take on more risk such as fuel expense, pricing and some revenue management.

skywest.jpgSkyWest Airlines during the last year has reached some pro-rate deals with long-time partner United Airlines and AirTran Airways.  The deal with AirTran entails the operation of five SkyWest-branded CRJ200s from Milwaukee, which has suprisingly been ian nteresting market to watch during the last few months after Republic’s buy of Midwest.

To further confuse you, some of the CRJ200s SkyWest is flying for United under pro-rate deals were previously operated under a capacity purchase with Midwest Airlines. But that deal was quickly dissolved around the time Republic became intertwined with Midwest.

Speaking at the Aero Club of Washington yesterday SkyWest President Chip Childs predicted a continuing trend away from contract flying to pro-rate deals.

But Childs isn’t concerned about regionals taking on additional risks in some cases. In some instances SkyWest works better with some smaller communities than its mainline counterparts, he says.

In fact SkyWest has a dedicated staff that evaluates service to communities, and can work with those localities to make the codeshare model work with legacy airlines, either through subsidies or other support.

Let’s hope leg warmers don’t experience a similar revival…..

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