Could Trans States Airlines closure buy time for other US regionals?

Apr 1, 2020

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Trans States Airlines officially closed its doors when flight UA4695 landed in Denver from Springfield/Branson, Missouri, arriving several minutes late at 10:38 a.m. local time Tuesday.

The United Airlines affiliate owes its early closure — it was due to shut down in December — to the novel coronavirus pandemic. The collapse in demand for air travel as people stayed home first due to fear of COVID-19 and now to stop its spread prompted United to slash schedules, a move that effectively removed Trans States Airlines from its regional operation.

Few travelers may have known when they were on a Trans States Airlines flight as the carrier flew exclusively under the United Express banner in its final years. However, its Embraer ERJ-145 jets were common on flights between United’s Chicago O’Hare (ORD) and Denver (DEN) hubs and smaller communities across the country, including State College, Pennsylvania (SCE), and Williston, North Dakota (XWA).

Ironically, or perhaps fittingly, the regional carrier’s final scheduled flight UA4620 that was due to depart Casper, Wyoming (CPR), at 11:45 a.m. local time for Denver (DEN) was cancelled.

Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.

“The impact of this global crisis is real and unfortunately, we are not immune from its reach,” wrote Richard Leach, CEO of Trans States Airlines-parent Trans States Holdings, in a staff letter on March 17.

And Leach was right that no airline, big or small, is immune. Trans States Holdings-owned Compass Airlines will also close its doors this month following similar coronavirus-related capacity cuts by its partner American Airlines.

Trans States Holdings’ final operator GoJet Airlines, which operates Bombardier CRJ550s for United, continues to fly.

Related: Trans States Airlines to shut down April 1, first US carrier to close amid coronavirus crisis

The loss of two regional carriers, however, may be a lifesaver — or life-extender — for other independent affiliates. While nothing minimizes the human toll of the loss of thousands of jobs, the sudden removal of more than 60 jets from fleets may be enough to bolster other regional carriers through the crisis and avoid further losses.

No other independent regional carrier, including Mesa Airlines, Republic Airways and SkyWest Airlines, has a contract expiring this year, pointed out The Air Current analyst Courtney Miller in March. Mainline carriers — American, Delta Air Lines and United — are unlikely to terminate a contract early outside of a bankruptcy reorganization, he wrote.

In addition, the big three have historically relied more on regional affiliates after a crisis rather than less.

Related: Compass to close doors in April with loss of American Airlines flying

However, as Delta CEO Ed Bastian has pointed out, the coronavirus crisis is worse for airlines than “9/11, SARS and the Great Recession all rolled into one.”

No one knows how far travel demand will fall or how bad the expected recession will be. Current expectations see the industry hitting bottom sometime in the second half of the year, and it taking years for passenger traffic to return to 2019 levels. These unknowns could throw past comparisons out the window.

“The accelerated shut down at Trans States, and the pending shut down at its sister airline, Compass, certainly highlights the vulnerability of smaller airlines and their workforce through this crisis,” Regional Airlines Association (RAA) president Faye Malarkey Black told TPG.

The Treasury Department’s plan to take equity stakes or warrants in airlines that take some of the available compensation grants from the government could potentially bar regional airlines from “accessing this relief on behalf of their employees,” said Black. She noted that these small carriers, many of whom do not own the planes they fly, do not have the same ability to repay such obligations as their larger partners.

Related: It may be years until passenger demand returns to 2019 levels for US airlines

For now, the U.S. airline industry is down one player — soon to be two — with no end of the crisis in sight. The government funds will tide many carriers over until September but then the market will determine who survives.

When Trans States Airlines flight UA4695 pulled up to gate B84 in Denver, it ended 38 years of airline history that began as Resort Air in 1982. During that period it flew a myriad of aircraft — including ATR 42s, Jetstream 32s and Metroliners — for partners ranging from American to Northwest Airlines and TWA.

“While I’m still grappling with the fact that this sad day has come much sooner than planned, I can’t help but reflect with great pride on our journey together and some of the many accomplishments that have made us a true pioneer in the regional industry,” wrote Leach in a letter to Trans States Airlines staff Tuesday.

Featured image by Robert Alexander/Getty Images.

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