Thursday, November 19, 2009

Is Bigger Better?

As the airline industry continues to struggle through the problems of decreased ticket sales and increased operating costs, one must wonder if bigger is better in both fleet size as well as aircraft size. Boeing (NYSE: BA) just released photos of their first 747-8, their latest version of one of the most successful wide-body jetliners in the world. However, as aircraft grow in size and capacity, the demand for smaller more specific routes increases. Airlines are having to accommodate more and more to passengers who don’t want to conform to the “hub to hub” nature of airlines. Customers don’t want to have to drive hours to a hub just to fly to a destination hub where another long drive awaits them before their journey is complete. Because of this, regional airlines have seen a surge of interest over the past decade. Smaller aircraft flying into smaller airfields have seen marked increases in interest. Sales have soared for the increasingly popular CRJ (Canadair Regional Jet) and similar ERJ (Embraer Regional Jet), aircraft which specialize in transporting smaller numbers of passengers to smaller service airstrips at commercial airline speeds. With the decrease of “layovers” and “plane changes” and the increase of direct flights, one must wonder if massive 500+ passenger jets aren’t flying themselves into obsoleteness.

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