Comair’s demise reflects changing airline partnerships

The shutdown of Comair, a regional carrier that Delta Air Lines once paid $2 billion to buy, reflects changing economics in the airline industry and the complicated relationships between major carriers and regional partners.

Erlanger, Ky.-based Comair’s death was a result of high fuel costs that made its 50-seat regional jets too expensive to fly and high labor costs that made it difficult to compete with other small carriers.

Saturday morning brought the last flight for Comair, a subsidiary of Atlanta-based Delta that flew under the Delta Connection brand. It marked the end for an industry pioneer that helped spearhead the introduction of the 50-seat regional jets that replaced most turboprops in the 1990s.

Now most regionals have moved on to larger jets that generate more revenue at lower cost.

Travelers may welcome the trend, as the larger planes are less cramped and more likely to have first-class sections. But the transition proved fatal for Comair, which at one time was a regional powerhouse with nearly 800 flights a day to about 100 cities.

By this year that had shrunk to 235 flights a day to 73 cities, with a major presence in Cincinnati, as well as New York. Atlanta operations always were limited, as Delta’s primary partner here has long been Atlantic Southeast Airlines, now merged into ExpressJet.

Delta says it expects no service disruptions or schedule changes, because other Delta Connection regional carriers are taking over flights.

The company’s 1,700 employees will be laid off, including about 30 Georgia-based pilots and flight attendants.

“We’re just disappointed to see our airline shut down,” said Comair pilot and union spokesman Allen Cook. “No one wanted to leave under these conditions.”

The workers can apply for any open positions at Delta, but Delta hasn’t announced any hiring for pilots, flight attendants or mechanics — the largest work groups at Comair. Some administrative employees will stay on past the last flight to help with employee transitions and the wind-down of the company.

Comair’s 16 50-seat regional jets will be retired, while the rest of its jets are being leased to other Delta Connection carriers.

Major airlines have long used regional partners to augment their service. Initially, the smaller carriers served smaller cities and fed passengers into the big carrier’s hub. With the advent of regional jets that could fly much farther than turboprops, the role broadened to filling schedule gaps on major routes and flying to farther-flung secondary cities.

Delta bought both Comair and Atlantic Southeast in 1999 and 2000, saying it wanted to gain full control of their growing fleets of regional jets, not to mention add their profits to its balance sheet.

“When the regional business was not only viable but robust and growing, it looked like it made sense to own them,” longtime airline consultant George Hamlin said. “I suspect they got their money’s worth out of it.”

A few years later Delta sold ASA during a financial crisis, though ASA continued to fly as a Delta Connection carrier under contract. After its buyout of Northwest Airlines, Delta in 2010 sold two regional carriers — Mesaba and Compass — that the Minnesota-based carrier had owned.

That left Comair, which failed to attract a buyer and primarily served a city, Cincinnati, that Delta had all but abandoned as a hub.

Now, Delta will use seven contract operators to fly for Delta Connection.

“The major carriers like having multiple regional partners so they’re not beholden to one or two regional carriers,” said Hamlin.

At the same time, airline mergers have led to fewer major carriers, and so “there’s not a need for as many regional carriers as we used to have.”

Comair struggled for years. Older regionals like Comair often have higher costs for labor with more senior pilots and other workers, along with older planes that are less efficient and require more maintenance.

Earlier this year, Delta disclosed plans to reduce the number of 50-seat regional jets from 350 to 125 at the most.

The downside, according to a U.S. Department of Transportation’s Office of Inspector General report, is that the reduction of 50-seat jets is expected to eliminate more service to the smallest cities, which don’t generate enough ridership to fill a larger plane.

Key to Delta’s move toward larger regional jets was a pilot union agreement allowing it to boost use of the larger jets, and a deal to lease Southwest Airlines 717 jets inherited through its acquisition of AirTran Airways.

Delta plans to use the larger regional jets and the Boeing 717s, which are among the smallest mainline jets, to operate flights previously flown by 50-seaters.

Comair announced its shutdown in July. President Ryan Gumm wrote in a memo to employees that Delta’s cutback in 50-seat regional jets would reduce Comair’s fleet to only 28 planes, boosting unit costs so much that the business model would be “no longer sustainable in this competitive regional environment.”

The decision was “an unfortunate necessity due to the economic limitations of our aging aircraft, cost structure, the long-term outlook for 50-seat aircraft, and our challenging industry and economy,” according to Gumm.

“It’s a shame… They went out and built something, but conditions changed — including the price of fuel — and it doesn’t work anymore,” Hamlin said. “The whole regional business has gotten much more difficult. It’s very much of a commodity, and a commodity has got to have the lowest cost.”

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