Podcast: Regional Airlines' Age Problem

Labor contracts prohibit many U.S. airlines from refreshing their regional jets with the latest technology. Does this open the door for a novel hybrid-electric venture—and perhaps even a turboprop comeback?

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Joe Anselmo (00:06): Welcome to this week's Check 6 podcast. I'm Joe Anselmo, Aviation Week's editorial director. The U.S. regional jet market is huge and has long played a critical role in bringing air service to smaller cities. In the 1990s, the sector was revolutionized by the introduction of regional jets, which replaced noisy turboprops on a large scale. But now those jets are getting old, and labor agreements with pilots are preventing airlines from procuring new equipment. That has opened the door a crack to new entrants like Maeve Aerospace and even raised the possibility of a turboprop renaissance. Here to break this all down are three of my Aviation Week colleagues. Christine Boynton is a senior editor for Air Transport. She's in Boston. Jens Flottau is our executive editor for commercial aviation. He's in Frankfurt, Germany. And the numbers guy, Dan Williams, is Aviation Week's director of Fleet Services and one of our chief forecasters. He is based in the UK. Christine, let's start out with the basics. I talked about the labor agreements — they're called scope clauses. Why are these scope clauses preventing regional airlines from buying the most modern airplanes there are?

Christine Boynton (01:17): Sure. Thanks, Joe. So scope clauses are part of pilot union agreements, and they essentially limit the number, size and capacity of aircraft that regional airline affiliates can operate. And those essentially were put into place to protect mainline pilot jobs from being outsourced to their smaller carriers for less pay.

Joe Anselmo (01:36): And Christine, you also wrote about Maeve Aerospace, this Dutch company startup that has a really unique offering. Tell us a little about that.

Christine Boynton (01:45): Sure. Yeah. So a lot of the regional carriers at the recent RAA Leaders Conference in D.C. the other week were talking about their future fleet strategies. So there's really only one scope clause-compliant regional jet left in production. So they're thinking about their future as regional fleets are getting older — sort of what's next for us. And so SkyWest, which is the largest operator of the Embraer 175, they're thinking ahead, and so they've announced this equity investment in Maeve, which is a Dutch startup, and they have basically invested in this company and secured launch rights for this future airframe. And an important thing for SkyWest is to be involved in the development of this future aircraft. So that was a big attractive element for them in becoming an equity investor at Maeve.

Joe Anselmo (02:34): Jens, where do you fall on all this?

Jens Flottau (02:39): Well, there are several different angles here to pursue. As Christine says, there's only one scope-compliant aircraft. The E175. Embraer has developed the 175 E2, which is not scope-compliant. It's roughly the same seat capacity as the 175 E1, but it's too heavy, so that can't really be used. I want to talk about Embraer for a little bit because Embraer does have good new-generation regional jets — the 175 E2, 195 E2 — none of them are scope-compliant, but Embraer has had some significant success with the aircraft this year, particularly the 195. They've scored big sales abroad with SAS Scandinavian Airlines, with LATAM down in Latin America and, interestingly, with Avelo. Avelo being a U.S. airline that doesn't have the restrictions of scope clauses because it doesn't have a regional unit and a mainline unit — it's just one unit.

(03:46): And the question that raises is whether or not Avelo is really the only carrier in the U.S. that can go down the E2 route and whether others are looking at it. I've talked to Embraer about it — whether there's a chance of scope clauses going away or being weakened or being more liberal. And frankly, the answer was no way. If there's one thing they've learned, it's that scope will stay. Scope will stay, which means there's no way they can get the E2 — the 175 E2 — into U.S. regional fleets. Now the question is: Can the 195 E2, which is a much larger aircraft — 130 seats, for instance, in a typical layout — can that go into mainline fleets? And the jury is still out there. I would say you could argue that some carriers like Delta have started to introduce the A220 in its mainline fleet, which is similar size. On the other hand, the big carriers have still tended to go for larger aircraft rather than smaller ones, just to cut down unit costs, with the side effect of many of the smaller market routes disappearing. So from Embraer's perspective, the Avelo deal was significant — was great, was good news — but is it the start of a trend? I'm not so sure yet.

Joe Anselmo (05:20): Just to go back in history a little bit, Embraer went forward with its next-generation jets, and they were betting that these scope clauses would go away in the world's largest regional jet market, the U.S. And that didn't happen, right?

Jens Flottau (05:34): That didn't happen. They even built a prototype, which is now stored at one of the sites in Brazil, and they've shelved the program. So until there's change in scope clauses, that aircraft will not be certified.

Joe Anselmo (05:48): So the Embraer 175s that a lot of our audience fly on — those are the original, older model 175s that are still scope-compliant, correct?

Jens Flottau (05:58): They are. And to give you some perspective, the U.S. regional jet fleet in service is roughly 1,500 aircraft. Around half of that is Embraer 175s. Now that part of the fleet is relatively young — at least the bulk of it — but the other half, which is older CRJ 100s, 200s, ERJ 145s, CRJ 700s, those are the ones that need to be replaced first. And as Christine said, there isn't really a good option here apart from the 175, of course. Maybe one comment on Maeve: One aspect that needs to be kept in mind here is that Maeve is backed by MHI — Mitsubishi Heavy Industries — which is the company that owns the CRJ program as well. So as the CRJs retire, Maeve is potentially one option for MHI to stay in regional aviation with its own program.

(07:02): At this point, they're in an advisory role — they're not an equity investor yet, I should say. The program is also backed by Pratt & Whitney, and Maeve has clearly stated that they're a small startup. They can go through the preliminary design phase, but once the launch — the industrial launch — happens, they need new investments. So there's a big decision coming up for people like MHI to decide whether they want to go ahead with it and then launch this new-generation regional aircraft, which is about 76 seats and scope-compliant. And yeah, it's really right now the only aircraft I see on the horizon that could go into that niche of the market.

Joe Anselmo (07:53): Christine, you talked about Avelo ordering — the U.S. carrier that ordered the Embraer 195 E2 jets. They had a big press conference at the National Press Club. They made a really big deal out of this. But there are people out there that are a little bit skeptical. I mean, Avelo has had some challenges, hasn't it?

Christine Boynton (08:13): Well, right before they announced this order, they announced some new funding as well. So they have new funding behind them. They're awaiting this new fleet, and they think this is going to be a really nice addition to what they fly. Right now they fly 737 NGs. It sounds like they're planning to retire the 700s, but they see the E2s as very complementary to their 800 fleet. And they're not going to start taking delivery of these until the first half of 2027. But they're very enthusiastic about this new aircraft type. They're going to operate them in, I think, a layout of around 140 seats in a two-by-two, single-class cabin.

Joe Anselmo (08:49): Dan Williams, thanks for your patience. You are just getting ready to release your team's 2026 Commercial Aviation and MRO Forecast. What does it say about regionals?

Dan Williams (09:01): Oh, well, thank you very much, and some great points made all the above. And I'm going to go backwards to look forwards because that's what I do, and I'm the numbers guy, so hey, I'll give you some numbers. So let's look at the jets. 2017 was the highest in-service fleet of the regional jet fleet, which is a touch under 3,700 aircraft. So when you go back to when Jens was talking about where 1,500 of them operate in and around the U.S., there is the market — 50% of the market is the U.S. carrier feeder network. That's how important it is. And that scope clause is all key. And again, people were betting the house on potentially the scope clause changing. It didn't. So the 175 E2 gets parked up. Mitsubishi, their first entrant into this scope-closed world was the MRJ 70 that had a multitude of names after that, but they walked into it. Personally, I thought it was a really interesting program.

(10:00): Next-gen powered aircraft that was scope clause-compliant from the start — they've walked away from that. The only small correction, if I may, to Jens and Christine is there is another scope clause-compliant regional aircraft, and it's the ATR. However, there's a big however — the general perception, and I think actually Joe, you said at the beginning, the regional jets replaced the noisy turboprops. So it is a public acceptance of the turboprops. If you go back 20, 25 years ago, you used to have American Eagle ATRs, and United Continental Connection, as it was then, were using Dash 8s, and Northwest Airlink even further back used to use Saab 340s. All of that's gone now. The feed and egg was as soon as the CRJ came in, that changed the landscape, and then it was followed by the Embraer 145, but they were built in a narrow band window.

(10:58): They're all going to retire in a narrow band window. So when it looks forward, we're going to see about 1,600 regional jet retirements over the coming decade with about 1,000 deliveries to replace those, and predominantly made up the 175. And when it comes to the turboprops, again, historically their highest in-service fleet was way back 2007. So it's been a long time since they've been at the peak, which was about 4,500. And they sit at about 3,500 today. And actually over the coming decade with predominantly the only entrant into the market is ATR plus Cessna with a 408 and de Havilland Aircraft of Canada with the Twin Otter, that number's going to dwindle because there's going to be so few deliveries — it's going to be about 400 or so deliveries over the coming decade.

(11:46): So that turboprop's going to diminish. The regional jet will stay similar. We're almost going to get a one-for-one replacement kind of in that market. But you're also seeing up-gauging. Jens talked about Delta moving some of their operations to mainline fleet with the A220s. We may see other operators do that. I doubt it because American like their feeding networks, and as long as that's going to carry on, they're going to have to buy 175s. The Maeve jet — it's an interesting concept. Having MHI on board is quite useful, but it has been over five years since the last CRJ rolled off the production line. So they've gotten a little bit rusty building aircraft up there in Canada as well with that line. So there's some really interesting things that could happen. But with the market generally moving bigger and bigger and bigger, we've seen A321s replace A320s — it is going, is following suit all the way down the market that the regional jets and turboprops are just getting edged out a little bit.

Joe Anselmo (12:50): So Jens, I think Dan just politely shot down what I said at the beginning about a potential turboprop revival. What say you about this? You've been — you followed Embraer when they were looking at launching a turboprop and ultimately pulled back.

Jens Flottau (13:03): Yeah, they thought they had identified a window of opportunity to come first to the market around 2030, which would've given them five to eight years or something, or maybe 10 years before your next-generation concepts would arrive — hybrid, electric, that sort of thing. They simply ran out of time because they didn't have an engine. And as that gap closed, they decided that it wasn't really worth pursuing that further. They did believe, however, that there was a market for turboprops, that they could overcome that skepticism in the U.S. that Dan has talked about, that ATR hopes will no longer be an issue, and that Maeve certainly also bets on disappearing. The interesting thing about Maeve is that they went through several redesigns of the airframe, and the latest one led to the engines being in the back so the passengers wouldn't see them. The cabin noise would be less, at least in the front of the cabin. So this is a huge issue that people are trying to address and that they hope people will overcome.

Joe Anselmo (14:27): Dan, I was just at Aviation Week's MRO Asia-Pacific Conference in Singapore, and that regional world is just exploding. I mean, if you look at the fleet growth projections and what you're projecting for that region, clearly the growth engine of our industry. So why aren't regionals thriving in that region like they are in North America?

Dan Williams (14:48): Another great question, and Asia-Pacific communities need connecting. So actually the ATR or the smaller turboprops, actually they do really quite well in and around the Asia-Pacific region, in part because of the airports that they need to get in and out of. That's restricted more by land infrastructure than anything else. And we've seen some success. Scoot took a couple of E2s, and they're going to operate them around the region. However, when you look at the vast majority of not just Asia-Pacific, but globally, it is the increasing LCCs — low-cost carriers — or ULCCs, ultra-low-cost carriers. And they've been edging away at those regional operators because they can fill a niche gap from secondary, tertiary airports even, and do the route that maybe people will happily fly from their local airport on one flight rather than have to take a commuter flight via a hub to somewhere else. So people may be changing their habits as well. And especially in Asia-Pacific, the huge rise of those LCC operators filling that gap and having that single fleet that really saves cost over time. That's why that is still finding it difficult to get into mainline operations over there.

Jens Flottau (16:12): But maybe it's just a question of timing and time, right? Obviously look at IndiGo and India at large. They're just right now introducing these huge fleets of narrowbodies, but they have indicated that they are looking as a next stage — that's Air IndiGo and Air India, both — that they're looking at the regional markets, the secondary markets as a next step. I just think they need a little more time. They've only just started, particularly India. Maybe the answer today is still no to larger regional jets or regional jets.

Joe Anselmo (16:44): Let's bring it back to the airlines as we sort of wind down. Christine, you were at the big regional airline conference they have every year in the U.S. What were some of the key takeaways that you saw there?

Christine Boynton (16:56): Well, certainly looking at the replacement options for aging regional jet fleets, but also to touch on turboprops, ATR has been making a kind of renewed push for the U.S. marketplace. And one interesting thing they talked about was a study they did working with Georgia Tech, and they've taken the data from 80 million mobile devices in the U.S. to analyze travel patterns. And so what they found is they believe from that data that there's actually demand for 300 aircraft to replace some jets where they're uneconomical or to revive air connectivity where routes have been closed or even to replace where folks are traveling by ground instead of air at the moment. So a recent order from JSX is something giving them confidence, and I think other regional carriers are waiting to see what the customer reception is to that particular order.

Joe Anselmo (17:48): OK. And Dan, let's end it with you. Any surprises in your forecast?

Dan Williams (17:53): Ooh, that would be telling. No, top-level deliveries down a little bit, but also retirements down a little bit at a top level, just. But we welcome you to come and join us on our roadshows around the world or listen to any of our webinars that we do. And I'm sure I might be invited back on one of these Check 6 in the future to talk a little bit more about it. And just a quick aside — that JSX is not really an order, it's just a letter of intent.

Joe Anselmo (18:21): And on that note, Dan and Christine are actually running off to record a live webinar on Dan's forecast. But if you want to see it, just go to aviationweek.com/webinars and you can catch a video recording of the 2026 Aviation Week forecast. That's all the time we have for now. A special thank you to our podcast producer in London, Guy Ferneyhough, and thank you to our audience for your time. Have a great week.