Thanks gentlemen, I knew I had come to the right place. 🙂

Would any patient member here be prepared to explain how the feeder Airline system in America works, as in how the agreement between (in this instance) CO and ExpressJet works;

Ta,

Wozza

I’ll try. There are 2 types of feeders, wholly owned and independent. The wholly owned are just that, owned outright by the major airline they feed. American Eagle is an example of this. Independent feeders are stand alone companies that sell their services to one or more major airlines. Chautauqua Airlines is an example of this. CHQ flies for American, Delta, US Airways and now Continental and Frontier.

The deals between a major and independent feeder vary quite a bit. Sometimes the major will help finance the operation and equipment while other times they’ll just pay for the service. A popular agreement between 2 companies is a Capacity Purchase Agreement. With a CPA the major airline buys every available seat on every airplane flown under their livery and usually sells the gas to fly them at a fixed rate to the feeder airline. Basically the feeder gets paid a fixed amount per hour to fly the airplane no matter how many passengers are in the back. The major airline sells tickets to cover that cost/hour amount as well as try to generate profit above that mark. Usually a CPA limits any profits the feeder makes to a certain percentage.

The major airlines seem to like this agreement as it guarantees the feeder service for the life of the CPA at a fixed cost. The feeders like it since it guarantees them income for the life of the CPA.

ExpressJet Airlines use to be Continental Express, a wholly owned division of Continental Airlines. In 2002 CO sold off COEX and it became it’s own company known as ExpressJet Airlines. Most of the wholly owned feeders have been sold off by their parent companies in the last few years as the majors are desperately trying to generate cash. CO and XJT have a CPA agreement which use to be exclusive until last year. In 2006 CO announced they were removing 69 airplanes worth of XJT service from the CO system and put a bid out to other airlines to come in and fly those routes. XJT in turn as taken those airplanes and rebranded them as ExpressJet Airlines, their own brand of flying. Initially the XJT brand was being used for charter operations but soon will include XJT flying out of the ONT airport to start. Rumors are that the service will be expanded to have a chain of hubs across the country. The only limitation is that XJT can’t operate XJT branded flying in/out of the CO hubs as it would be a conflict of interest as XJT is still flying under the CO brand in those hubs.