The coming year may be a challenge for regional airlines as their mainline partners continue to cut capacity and seek contract concessions, according to analysts from Raymond James & Associates at its annual Growth Airline Conference in New York last month. "Capacity is being reduced and organic growth opportunities are limited," said analyst Duane Pfennigwerth. "Future growth could come from consolidation or a move towards more high-risk opportunities." In the past, regionals enjoyed robust growth during financial downturns when mainline carriers outsourced flying to lower-cost partners. Also, major airlines were able to gain scope relief, allowing greater latitude in the use of regionals. Now some legacy carriers-Delta Air Lines was cited as the most "aggressive manager of its regional suppliers"-are trying unilaterally to cancel or restructure their long-term contracts, the analysts said.
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