Aviation Competition: Regional Jet Service Yet to Reach Many Small Communities

The increasing numbers of regional jets (RJ) in operation have provided U.S. air carriers with opportunities to serve new and existing markets. With predominantly 50-seat aircraft, the carriers have initiated service to many large and medium-large communities but have provided less service to smaller communities. Service to small communities--to which the airlines now mostly operate turboprop aircraft--continues to be an important concern, because of the uncertainty about whether those markets may generate enough passenger traffic and revenue to be financially viable to sustain RJ operations. Eventually, smaller RJs may let carriers serve those smaller communities economically. Other questions also emerge about the impact of how the carriers will use their RJs. For example, the airlines could restrict capacity in a market by reducing service with larger mainline jets but increasing the number of RJ flights in a way that may inhibit entry by new competitors, allowing the airlines to charge fares higher than might exist in a more competitive market. Additionally, the growth in RJs has clearly contributed to an increasing problem with congestion, particularly in some locations like New York's LaGuardia Airport. But how the expected growth in RJs may continue to contribute to congestion and delay remains to be seen. Depending on how events unfold in the near future, these and other potential impacts of the airlines' RJ strategies may warrant continued oversight.