What makes an airline "regional" and why is there a distinct branding for those?

Question

I am puzzled about the designation of "regional airline".

So far, I noted that most airlines designated as regional are part of a "main" airline and display a spin-off brand from the main airline identity.

Some examples:

• HOP! (Air France)
• Lufthansa Regional
• Jazz (Air Canada)

The only difference I have noted are the size of the aircraft. They mostly fly Bombardier CRJ, Embraer, perhaps Saab 2000, in general smaller jet or turboprop aircraft with 2+2, eventually 2+1 seating layout, instead of the typical A319/A320/B737 seen in short haul.

All routes I have flown on regional airlines in the past, in Europe at least, are routes I have also flown on "regular" airlines, such as BOD-LYS (Air France A319 and HOP! CRJ900), CDG/ORY-PUF (same), TLS-GVA (Etihad Regional Saab 2000 and easyJet A320 NEO). Such flights did not seem "regional" to me at all, as we crossed a major distance in the country.

Therefore, why do airlines maintain that regional subsidiary brand? Would not that be simpler to unite the whole fleet under one single brand?

Answer 1

At least in the US, regional airlines have separate contracts with the pilots' union, which allows them to pay their pilots less than the mainline carriers. A common career progression is for pilots to start working for regional airlines and then "move up" to the mainline carriers. The contracts also have a "scope clause" that only allow the regional carriers to operate aircraft up to a certain size, to prevent carriers from moving more flights to the regional carriers in order to reduce the need for more-expensive mainline pilots.

Answer 2

The “regional” brands are nearly always operated by separate airlines/companies.

Those companies may or may not be subsidiaries of the main airline, or there may be only part ownership.

This results in more flexibility for airlines: if the operator is a completely separate company, then they have the flexibility of being able to stop the contract whenever they want (subject to contract terms and applicable law of course), which in many places (especially in Europe) is quite different from having to lay off people.

Even if the company is owned or part owned by the group, it often allows them to have different contracts with the pilots, crew, and other staff, which for incumbents often means lots of social advantages and wage grids anchored in decades of history.

There are also cases (especially in the US) where some regional flights are loss-making due to the very small airports they serve, and are heavily subsidised. Having isolated companies operating those probably helps in those setups.

In some cases it also allows them to take advantage of “better” conditions applicable in different countries. For instance Air France has another regional affiliate which is Cityjet, and they operate out of Ireland, rather than France.

Sometimes over time the relationship evolves, and completely separate companies are bought by the “main” airline, usually only if they manage to maintain separate staff agreements.

Answer 3

For Air France Hop and Lufthansa Regional, one important detail is that they all originated in acquisitions, mergers, or agreements with smaller independent local airlines serving one specific region of the country (don't know anything about Air Canada / Jazz). Even after being integrated in the network of the parent airlines, keeping them separate in terms of branding and operations can have some advantages, including different contracts and pay scales for the staff.

Such flights did not seem "regional" to me at all, as we crossed a major distance in the country.

They are still regional in the sense that these airlines don't operate international and especially intercontinental flights, unlike Air France and Lufthansa. You could interpret that as staying in the same region of the world or serving other regions of what are ultimately rather small countries but no matter the terminology the difference is quite clear.

Answer 4

Regional airlines operate in a different manner from a flight operation and financial perspective. This leads to a good number of differences in things like insurance, regulatory requirements, etc. The companies may operate under the same umbrella, share some less-regulated resources (like check-in counters) and have similar branding, but they are functionally very different companies.

Note that the market is very different in the US than it is many other places in the world. The US has many smaller cities with significant airports that are far enough away from each other to make train travel less desirable, in a nexus with an average small business and family income that can support buying airplane travel. The economics and regulation used to be different than elsewhere, although there are many parts of the world where this has changed or is changing.

Running an airline is a difficult and small-margin operation. A small change in reputation (like what Quantas or Ryanair experienced) can easily hit sales enough to put an independent regional underwater, leaving it with $10B of medium-grade assets (lots of airplanes). Just then, a larger airline with $50B of annual revenue steps in to buy the planes at 80% value. Jazz or HOP! is born, the larger carrier gets to expand its market by serving smaller cities and lots of people keep their jobs. It looks enough like Air Canada to be safe so it must be safe, right? Because what color you paint your airplanes determines the airline's safety record...

Wikipedia's article on regional airlines provides some good information about these details. It's a good read.

Answer 5

The examples of regional airlines I can think of, in Asia, are/were separate companies with similar but not identical branding. DragonAir, later renamed Cathay Dragon, had its own fleet of planes, its own HQ, and, more importantly, its own employment contracts, much less generous than Cathay's. Same goes for airlines like Air Busan, Air Seoul, Jin Air, Thai Smile (which is the only one I can think of that was merged into the parent company).

They are/were regional because their network took care of destinations that the parent company would either not touch – too expensive to fly to on the company's overhead and fleet – like many Mainland China cities that KA flew to, or partly offloaded to the sister company. Thai and Thai Smile both flew to places like Yangon and Vientiane, although Thai would have maybe one flight a day, whereas Thai Smile would do the rest. DragonAir would have, on the other hand, one flight daily to Taipei (08:00 from HKG, 20:00 from TPE) offering a cheaper, if less attractive, time-wise, flight, whereas CX would fly the 9/10 other daily flights. I believe in this case it was so that KA could partake in the juicy HKG<>TPE market, without hurting CX's profits.

With such airlines, the size of the airplane is not always significant. These 2 defunct regional airlines, plus the Korean LCCs, and others, often have A320 and/or B737 and the like in their fleet, since they fly far enough, and with enough passengers, to justify this. Firefly, one of the 2 MAS LCC, had a few B737. Thai Smile had a dozen A320. KA had ~50 planes, all A32x. Likewise for Asiana's LCCs, all A32x, whereas Jin Air is all B737. They fly these planes because they need the range and capacity.