No, Losing Air Wisconsin Regional Jets Isn’t A Blunder By United

Air Wisconsin’s fleet of around 60 small metal tubes will shift from flying as United Express to American Eagle starting in March.

  • These “CR2” 50 seat regional jets are among passengers’ least favorite
  • But offering flights on these is better than not offering flights

    There’s nothing for American flyers to be excited about here. United has presented its plan as flying with bigger, more passenger-friendly planes. Which one is the better move is basically a bet on a different business, and we’ll have to see which proves out right.

    Cranky Flier sees the deal as a coup for American because pilots are in short supply and Air Wisconsin has pilots, which means flying American couldn’t otherwise do and now United can’t do.

    Though United has expressed interest in retiring its smaller 50-seaters in the longer run, it can’t afford to lose a big chunk of them in just a few short months. It is not ready for that, and this is going to be painful. The airline has already ended service to a slew of cities since the pandemic began, some due to SkyWest being unable to support an Essential Air Service contract it had directly the feds and flew under the United Express banner, but others are simply an issue of needing to make hard decisions about where to deploy the limited resources that are available. Here are the cities that have fallen off the map.

    This seems to me wrong. Arch Capital, which held a big stake in Air Wisconsin, told investors in February that the airline had only five quarters left of revenue in the United deal before it expired, and that United no longer wanted these planes under the United Express banner.

    United has been talking up moving from smaller regional jets to larger ones for some time. The idea that United “can’t afford to lose” a big chunk of the Air Wisconsin fleet of CR2s simply doesn’t comport with what United thinks or else United wouldn’t have decided not to extend the deal for these planes.

    Would United have taken the pilots and had them fly bigger (CR7) planes as Cranky later suggests? Perhaps, though United is constrained in the number of larger regional jets it can fly. But that argument contradicts his claim that United can’t afford to lose the small jet operation.

    • United chose not to renew the Air Wisconsin contract. That’s why Air Wisconsin is doing this deal with American. In fact without anyone to fly for, but still with the costs of its fleet, it likely offered a very favorable deal to American.

    • American gets cheap regional feed, and that’s a plus when there aren’t enough pilots to operate planes especially at regional airlines. They’re basing these planes at Chicago O’Hare, where Air Wisconsin already operates. That’s fortuitous for another reason – Chicago hasn’t been a profitable hub for American, but it’s also an asset they cannot walk away from. Flying contracted small jets is cheaper than flying mainline aircraft.

    • On the other hand, downgauging O’Hare flights relegates American to continued unprofitability – these are high cost planes on a per seat basis, less total cost for the flight but higher cost per passenger. The product is also less appealing than what United will offer on most routes with overlap.

    This is a strategic play for American to maintain an operation in Chicago at lower cost, and it is a strategic play for United because dropping Air Wisconsin and smaller regional jet flying is exactly what they have wanted and planned. United has more opportunity in Chicago than American does, so flying bigger planes is attractive. United’s challenge here is an inability to operate more regional jets with more passengers until they grow the mainline fleet. Longer term there is more upside to United than to American, though it’s possible some United routes will not remain viable with larger aircraft.

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