A diverse set of business models separate regional airlines from their larger counterparts around the world.
As airlines fight through COVID, the fates of regional jet and turboprop are largely dictated by the business models in which they fly.
The nuances of regional aviation — geographically and commercially — are central to understanding the future viability of regional aircraft.
The business of the passenger airline is inherently simple. Boiled down, passengers pay money for transportation, potentially more for add-on services while the airlines move that passenger safely and economically. Various other forms of managing revenue exist for the airline industry, including selling available space to cargo providers, however, the fundamental tenant remains – more passengers at higher prices bring better business.
Yet, for the regional airline industry, that relationship between passengers and revenues may not necessarily exist. Whether through government subsidies or various partnerships, a regional airline may not have any association between revenues and the number of passengers on board. Conversely in another regional airline business, the passenger may prove to be an outsized contributor to revenue when acting as a spoke to a high-revenue international flight, for example.
These are wildly different business models and assessing the potential and risk of a regional airline becomes a significantly more complex task than at the larger, more traditional airlines. For regional aviation during the pandemic, a detailed understanding of the various regional business models — and their central enabler, the aircraft they fly — is critical. With this in mind, TAC Analysis continues its exploration of which types of regional airlines are excelling in the pandemic era, which are struggling, and what this means for the various aircraft types operating at each.
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