While there’s nothing official as of now, something interesting could be brewing between Delta Air Lines and its wholly owned regional subsidiary, Endeavor Air.
In this post:
Why regional airlines exist, and why they’re inefficient
All of the “big three” US carriers have regional subsidiaries — namely American Eagle, Delta Connection, and United Express. With this, we see separate airlines operating regional jets on behalf of the major airlines. Each of the “big three” carriers has multiple regional subsidiaries, given how many regional jets they operate. In some cases the carriers are wholly owned by the major airlines, while in other cases they aren’t.
Why don’t the major airlines operate their own regional jets, but instead contract that flying out to third parties? Well, it’s mostly about cost savings. By contracting this flying out to third parties, the pilots, flight attendants, and other workers at these airlines, don’t have the same pay scales as you’ll find at the legacy carriers. The cost savings for airlines have historically been significant.
There’s a tradeoff here, though. As you’d expect, the unions representing pilots at the major airlines don’t like jobs being outsourced to lower paid pilots. So their contracts contain scope clauses, limiting the number of regional jets that can fly, and also limiting how many seats these planes can have.
Quite a few regional jets in operation are configured with fewer seats than they would ideally have, specifically because of these scope clauses. Airlines want to be able to operate regional jets, but are often maxed out with regards to the scope clause, and the unions (understandably) aren’t willing to budge. For example, this is why United Express has CRJ-550s, which are essentially rebranded 70+ seat CRJ-700s configured with just 50 seats.
Delta & Endeavor pilots are in negotiations
There has been some discussion on airliners.net about whether Delta’s wholly owned regional airline, Endeavor, could be folded into Delta’s mainline operation. @xJonNYC shares a memo that adds some credibility to this.
Specifically, the unions representing pilots at both Delta and Endeavor have passed a joint resolution supporting bargaining goals. As this explains:
- Both unions passed a joint resolution supporting the establishment of a joint working group that would lead to all Delta passengers being flown by Delta pilots; this specifically suggests that regional jets would also be flown by Delta pilots
- The agreement clearly states that no Endeavor pilots would have higher seniority than any existing Delta pilots
Will Delta fold Endeavor into mainline operations?
All we know so far is what’s stated in the above memo, so perhaps we’re all just reading too much into this. However, we do know that the unions representing pilots at Delta and Endeavor are at least having discussions about possibly merging their pilot groups. While we haven’t heard anything from Delta management, I have to imagine that something prompted these discussions.
Does this mean that Delta could integrate Endeavor into its mainline operations? I actually could see quite a bit of merit to this:
- If there’s a US airline that would do this first, it would be Delta, given that the airline is generally most innovative in these kinds of ways
- Unlike some other regional airlines operating on behalf of Delta, Endeavor is a wholly owned subsidiary
- Wages at regional airlines have increased massively since the start of the pandemic, which minimizes the cost savings from outsourcing this flying to third parties
- In terms of staffing, the only hurdle Delta would have to overcome here is with pilots, given that flight attendants at Delta aren’t unionized, so the airline has a bit more leverage there
- Given the pilot shortage, Delta would be in a good position in terms of having so many more “mainline” pilots who could start on the regional jets, and then work their way up
- Integrating regional operations into the mainline fleet would allow the airline to be more efficient, as seats could be added to many regional jets that are currently restricted by the scope clause
- Delta has long had smaller aircraft in its mainline fleet than American and United, and has made the economics work; for example, Delta has Boeing 717s with just 110 seats in its mainline fleet
While I don’t think it’s a guarantee that this will happen, I do think it’s likely that these discussions are happening, and I could see this becoming a reality. I suppose it all comes down to what kind of an agreement Delta is able to make with its union representing pilots for what kind of pay these pilots would get. The truth is that at this point, the pay scales aren’t actually that far off.
Below is the pay scale for the new industry-leading contract that Delta pilots have ratified.
Meanwhile below is the current pay scale for Endeavor pilots.
Honestly, at this point the differences are minimal. The pandemic sure has changed a lot of things. Pre-pandemic it would have been inconceivable to think that a mainline carrier would swallow a regional carrier in this way. However, now it seems like this could make sense.
If Delta doesn’t actually plan to integrate Endeavor into its mainline fleet, what could another explanation be for these discussions? Since Endeavor is a wholly owned subsidiary, I suppose it’s also possible that the two companies are working out some sort of an agreement that would allow Endeavor pilots to advance to Delta after some amount of time, or something.
Bottom line
The unions representing Delta and Endeavor are in discussions about establishing a joint working group. It’s anyone’s guess what this will look like in practice, though it sure seems like we could see Delta’s wholly owned regional airline folded into the mainline fleet.
At this point cost savings are minimal from having a regional airline, given the huge pay bump regional jet pilots have received. Then when you consider the advantages of not having to deal with a scope clause, the benefits could outweigh the costs.
Honestly, this would have been totally unthinkable pre-pandemic, while at this point the math seems to almost make sense. I’m curious to see how this unfolds.
What do you think — could we see Endeavor folded into Delta?
What on earth would Delta have to gain by folding Endeavor into Delta? The pilots, sure. But all Delta would gain would be mechanics and flight attendants that would get paid more and pilots who would very quickly demand "pay for command, rather than productivity" for RJ captains.
This is precisely why United walked away from buy Horizon and ultimately retreated from the West Coast in favor of Alaska.
United wanted to pay...
What on earth would Delta have to gain by folding Endeavor into Delta? The pilots, sure. But all Delta would gain would be mechanics and flight attendants that would get paid more and pilots who would very quickly demand "pay for command, rather than productivity" for RJ captains.
This is precisely why United walked away from buy Horizon and ultimately retreated from the West Coast in favor of Alaska.
United wanted to pay its 737 and 727 pilots more in line with pilots from the emerging ultra-low startups and post bankruptcy carriers like PeoplExpress and Continental, while continuing to pay DC-10 and 747 pilots as they had been. This would have meant Horizon captains flying a 50-seat DH8-300 getting paid something closer to a 737 captain on the theory that command responsibility is the same whether there's 50 or 250 passengers behind the captain. This, of course, would have made operating Horizon impossible.
If Delta suddenly had CR9 captains on their ALPA contract, it's a no-brainer their productivity would collapse compared to as it is at Endeavor and places like Columbus, GA, Dothan, AL and Marquette, MI would quickly be served by Contour or Denver Air Connection.
The reason it hasn’t happened before is the Union pay scale disparity.
Delta has fewer unions than the other majors.
But they definitely could have the pilots on the same seniority list. I could see this happening at all the majors to protect their own express carriers.
United already owns a share of Mesa which flies exclusively for United. It would make sense there, as long as the unions agree.
1) The FAs and Mechanics are part of the equation.
2) There’s always the dream that the market will reverse and they can go back to pilots on food stamps flying JFK to DFW in 76 seat jets.
3) If the unions / Co do a reasonable deal, this could work out to a win-win. It’s just difficult because there’s so many variables to it.
Interesting that this discussion so far has been focused only on flight crews. These aircraft will undergo many thousands of man/hours of maintenance as well. There is a wide disparity in pay between Endeavor techs and Delta techs. This may drive the CASM up so hight RJs no longer make sense.
Integrating Endeavor and its fleet of 136 69-76 seat aircraft might also allow DL to add 136 more E175 at Republic and SkyWest. I am pretty sure the scope language only allows X number of airframes to be outsourced to a third party carrier. Absorbing Endeavor would lower that number.
I imagine this would also put Delta in a stronger position to end its contract with Sky West. Sky West is a dumpster fire. Delta has been trying to get rid of the CRJ-200s for several years but Sky West isn't in a position to do so. Sky West is also very unreliable compared to other regional carriers.
Especially since Endeavor retired their 200s earlier this month...
Business as usual, you combine them for a decade, financial crisis hits, you break them up again.
Then when things boom again you combine them for another decade until the next financial crisis hits.
@Eskimo
I think you hit the nail on the head.
Airline pilots seem to be somewhat temperamental. I would not want to work for mainline Delta if I were to lose seniority to other pilots already flying for the airline. Otherwise, I think that the airlines should have operated their own regional aircraft from the start.
Tweaked some wording in the opening paragraph:
All of the “big three” US carriers have regional [brands] — namely American Eagle, Delta Connection, and United Express. With this, we see separate airlines operating regional jets on behalf of the major airlines. Each of the “big three” carriers has multiple regional [operators], given how many regional jets they operate. In some cases the carriers are wholly owned by the major airlines[, and are subsidiaries], while in...
Tweaked some wording in the opening paragraph:
All of the “big three” US carriers have regional [brands] — namely American Eagle, Delta Connection, and United Express. With this, we see separate airlines operating regional jets on behalf of the major airlines. Each of the “big three” carriers has multiple regional [operators], given how many regional jets they operate. In some cases the carriers are wholly owned by the major airlines[, and are subsidiaries], while in other cases they aren’t[, and are franchises, operating on behalf of the major].
I wonder if part of this would be as a pipeline solution. With one seniority list Delta would be pilot’s first choice over the regionals, and they’d (theoretically) have a job for life. And then Delta wouldn’t be competing at all to hire mainline FOs.
Worth pointing out that E-190s were mainline on US Airways and no one seemed to notice or care
I have no clue why other US airlines have not picked up E-190's. Most passengers for two FA's. There are plenty of markets that could support an up-gauge from a 175.
The word is that the E-190's fuel efficiency was less than advertised. JetBlue was actively disappointed by them and was looking for years to get rid of theirs
I think the hangup is that 9E operates exclusively CR7/9s - which are perceived by pax as a "regional jet" - as contrasted with the E175s that "feel" more mainline. But, that can easily be overcome, especially if integration means no more scope clause.
The logical thing for the airlines to have done is to raise the scope clause as part of the plan to pay the mainline pilots more.
This current proposal for Delta and Endeavor looks like the old "B-Scale" concept. It is not a bad idea, as long as Endeavor pilots can transition over to mainline Delta.