Aha! Airlines and it’s parent company ExpressJet have filed Chapter 11 bankruptcy, and all flights will cease flying immediately. The airline has flown as a regional carrier for many years with United and Delta, but after losing the partnership, they formed their own airline: Aha!
“A combination of conditions led us to this decision,” ExpressJet CEO Subodh Karnik said in a statement. “Despite the valiant efforts of our employees to overcome challenges, and despite great support by our cities and airports – especially Reno-Tahoe and the community there, we arrived at a point where termination of operations was in the best interest of our stakeholders.”
Based in Reno, the airline flew to 11 destinations.
They were doing anything but honestly. Monthly load factors never exceeded 45%, and in the last quarter it was sitting in the upper half of 43%. On a 50 seat plane that is only about 22 passengers, and with them having fares in the $100-$150 range typically that only means $3,300 in revenue on the average flight, certainly hard to break even on operating costs let alone turn a profit.
from: ExpressJet - Wikipedia
“On June 14, 2022, United Airlines Holdings Inc. quietly divested its stake in the parent company of former regional carrier ExpressJet Airlines. ExpressJet Airlines LLC became 100% owned by KAir Enterprises and affiliates.”
KAir Enterprises seems a bit of a mystery. But the backing of United being withdrawn is a good clue.
Yeah, I was just reading something about why the larger companies hold on to regionals and (used to?) give some profit formula to keep them going even when they were underloaded. So the larger airlines found some wider benefit in taking on some loss of their regional affiliates.
And now it doesn’t work anymore in United’s eyes. So they pull out. I wonder what tipped the balance(?).
My guess it’s because they saw that the profit wasn’t coming in as they expected - it’s better (for the investor) to pull out of the investment if it doesn’t seem to be profiting. If they see a company scrambling for a solution to losing money, it’s best to pull out while they can.
The rough impression I got from reading a bit was that majors need to fill up their denser routes (to be profitable on the dense routes). But a good fraction of all passengers are fed to the denser routes by the regionals.
But it would be expensive for the majors to own the regionals outright. So they make affiliations with regionals with their much lower labor (contract) costs. And often also use them as recruiting tools like minor league baseball does for major league. Pilots move up etc.
So if all of the above gives them more benefit than the loss that their regional affiliate is making, then they actually benefit from taking the loss of the regional affiliate.
But at some point if the loss is more than the benefit then the pressure increases on them to get out of the relationship.
There’s a question that comes out of all of this: Over a long period of time, why would costs of regional carriers be sustainably lower if they are essentially providing the same service to a passenger as the majors? The advantage the majors are “squeezing” from the regionals is transient?