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

April 01, 2020
7 min read
Could Trans States Airlines closure buy time for other US regionals?
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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

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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 Getty Images

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    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
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Why We Chose It

It's hard to find a card that competes with the mile-long list of benefits that come with the Amex Business Platinum. While it's certainly not the card for the average consumer, a business owner with tons of expenses -- especially related to travel -- will find this card incredibly valuable. This card is similar to the consumer version that Amex offers, but with more business-oriented perks around statement credits and earning rates that are a better fit for business owners.

Pros

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  • Extended warranty protection
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  • Steep annual fee
  • Difficulty meeting $15,000 welcome offer for smaller businesses
  • Limited high-bonus categories outside of travel
  • The Points Guy Exclusive Offer: Earn 150,000 Membership Rewards® points after you spend $15,000 on eligible purchases with the Business Platinum Card® within the first 3 months of Card Membership.
  • Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com, and 1X points for each dollar you spend on eligible purchases.
  • Earn 1.5X points (that’s an extra half point per dollar) on eligible purchases at US construction material & hardware suppliers, electronic goods retailers and software & cloud system providers, and shipping providers, as well as on purchases of $5,000 or more everywhere else, on up to $2 million of these purchases per calendar year.
  • Unlock over $1,000 in annual statement credits on a curation of business purchases, including select purchases made with Dell Technologies, Indeed, Adobe, and U.S. wireless service providers.
  • $200 Airline Fee Credit: Get up to $200 in statement credits per calendar year for checked baggage fees, lounge day passes, and more at one selected airline.
  • $189 CLEAR® Credit: Use your Card and get up to $189 back per year on your CLEAR® membership. CLEAR® is available at more than 50 U.S. airports and stadiums.
  • The American Express Global Lounge Collection® can provide an escape at the airport. With more than 1,400 airport lounges across 140 countries and counting, you have more lounge location options than any other credit card on the market as of 9/2021.
  • $695 Annual Fee.
  • Terms Apply.