With someone else picking up the fuel tab, the nation's regional airline sector continues to be more profitable than the network and low-fare carriers.

The Bureau of Transportation Statistics (BTS) reports that in the first quarter, the seven largest regional carriers collectively had the best profit margin - 8.5 percent, or a collective profit of $117 million. The seven largest low-cost carriers collectively posted a loss of $115.7 million, while the network carriers, again the seven largest, posted a first quarter loss of $1.3 billion.

However, even as the regional sector is the most profitable and continues to generate the best revenue yields, the numbers are not what they were a year ago. In April 2004, the regionals had an 11 percent profit margin. Its revenue yield for the first quarter this year was 21.1 cents per mile compared to 22.4 cents per mile last year.

Since the BTS report is based on the mandatory filing of Form 41, the report gives a glimpse at the financial performance of American Eagle, a unit of AMR [AMR], and Comair and Atlantic Southeast Airlines (ASA), both units of Delta Air Lines [DAL]. Neither AMR nor Delta provide detailed financial reporting to U.S. Securities and Exchange (SEC) on their regional carriers.

The operating margins for American Eagle, Mesa Air Group [MESA], Pinnacle Airlines [PNCL], SkyWest Airlines [SKYW] and ExpressJet [XJT] exceeded all others among the 21 carriers surveyed by BTS, including the best-performing low-cost carrier, JetBlue Airways [JBLU]. In fact, only Comair and ASA posted sub-par operating margins - perhaps due to the restructuring of its near-bankrupt parent, Delta.

Every regional carrier, including Comair and ASA, had better revenue yields than the best performing network carrier, Northwest Airlines [NWAC], and the top performing low-cost carrier, Frontier Airlines [FRNT]. One factor was the high price of fuel - the regionals' major airline code-share partners pay for that.

When BTS ranked the carriers based on unit miles traveled - revenue per available seat mile (RASM) and costs per available seat mile (CASM) - the regional carriers were at a disadvantage because their operations are based on much shorter flights. As a result, the regional sector had the highest unit operating costs at 13.3 cents per mile. The networks were second at a fraction of cent lower: 13.2 cents per mile.

However, the most expensive regional carrier, American Eagle, tied U.S. Airways' [UAIRQ] CASM and was less than Continental Airlines [CAL] and Northwest. The least expensive regional, Mesa, was lower than all the network carriers and lower than bankrupt ATA [ATAHQ] and Frontier in the low-cost sector.

On the revenue side of the balance sheet, all seven regionals reported first quarter RASM figures that were higher than any low-cost carrier and higher than three network carriers: Continental, Northwest and US Airways.

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