US regional carriers flying small turboprops are finding lucrative markets and new business models as mainline carriers continue scaling back on 50-seat regional jets.
Speaking at the Regional Airlines Association convention, executives of Great Lakes Aviation and the newly-relaunched Silver Airways, formerly Gulfstream International Airlines, described a rapidly growing market for 20-40-seat turboprops.
"I think there will be a lot more opportunities," said Chuck Howell, chief executive of Cheyenne-based Great Lakes, which operates 19-seat Beechcraft 1900s and 30-seat Embraer EMB-120s. "There will be a wave of cities losing service."
Mainline carriers, such as Delta Air Lines, are already pulling back 50-seat jet service in key markets, and using carriers like Great Lakes and Silver Airways to fill the gaps in their service. Delta, for example, eliminated several routes in the Upper Midwest region feeding its hub at Minneapolis-St. Paul airport last year.
Great Lakes has already entered the market on Delta's behalf, launching service on nine routes to Minneapolis already with more to follow. Meanwhile, Delta has created a new "enhanced interline" relationship with Great Lakes on those routes.
"That particular business model works where they do not want to put the brand on the turboprop equipment or whatever yet it still suffices to feed the traffic to the mainline carriers," Howell said. "I think you will find it more and more as time goes on in the small- and medium-sized markets."
Gainesville, Florida-based Silver Airways chief executive Darrell Richardson said such interline agreements allow passengers to book tickets and check bags on the carrier's mainline partners, but it stops short of a codeshare.
"We'll have it up and running in close order here, and it's going to be a very seamless package for those folks," said Richardson.
The deals may become even more common as changes are made to the essential air service (EAS) programme, which has the US government subsidise service to hundreds of small communities.
The recently signed reauthorisation bill for the Federal Aviation Administration includes a provision that prevents adding new cities to the programme and could lead the programme to eliminate some markets next year.
"We don't think there's any near-term shock to the system, but I think you will see a handful of markets drop out, which probably won't happen until the election is over" in November, Howell said. It will be in the second quarter next year "before I think we'll see any shock to the EAS cities," he added.