European regional airlines have the worst behind them in terms of downsizing and restructuring, says the European Regions Airline Association’s (ERA’s) Director General Simon McNamara.

“I’d like to think things will improve next year”, he told Aviation Week on the eve of the ERA annual general assembly, which is being held this week in Salzburg, Austria.

“I don’t think we are going to go back to easy sailing, but to a smoother ride,” he adds.

In the first half of 2013, the European regional airline industry continued to shrink. Passenger numbers across the 50 ERA members declined 7.2% and the number of seats offered was down 10.1%. “The most damaging factor for us is the economy,” McNamara says. “Fuel has been high for some time.”

The European regional airline industry has also seen many high-profile restructuring cases, such as the consolidation of Air France regional affiliates into the HOP unit, the ongoing problems at Air Nostrum and Flybe, and the shrinking of Lufthansa’s regional network that will see the shutdown of Augsburg Airways by the end of October. “The old model of independently operating regional routes is going away,” McNamara says. Those services are being taken over either by mainline legacy or low-cost carriers.

On the other hand, “you are already seeing the new model,” he argues. In the future, European regional airlines will have to become less dependent on a single source of incoming traffic, and spread the risk across several streams, McNamara says. The three pillars which regionals can count on in the future will be niche point-to-point markets that are too small for low-cost and mainline carriers, ACMI work for major airlines and ad-hoc charters, particularly in the 50-seater segment.