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Later this year, JetBlue [JBLU] will begin to fly the Embraer [ERJ] 190 to cities currently served by regional carriers. Much has been said that this particular aircraft in the hands of JetBlue will erase the already fuzzy line dividing regional and mainline carriers. What do you think?

Joseph D. Randell
President and Chief Executive Officer
Air Canada Jazz
(902) 873-5000
joseph.randell@flyjazz.ca

Clearly the entry of JetBlue into the market utilizing the Embraer 190 will have an impact upon both the regional and mainline carriers. As is the case today, the mainline carriers will continue to use the regionals to improve their competitiveness in their markets. The entry of JetBlue with this aircraft type will clearly cause the mainline carrier to respond with similar operations; the question is how. It will only be successful if either the mainline carriers can adjust its costs downward to compete on the same basis as JetBlue, or alternatively, the mainline carrier will be forced to seek ways to utilize the less expensive services of a regional. In most cases, I believe the best result for the mainline carrier will include the increased services of regional carriers flying on their behalf.

Carriers will continue to move more closely together in their service offerings. Low fare carriers will continue their expansion/diversification, while the successful mainline carriers will continue to reduce costs and simplify operations. The only difference is that low fare carriers generally do it themselves, while mainline carriers are doing it through a successful partnership with lower cost regional carriers.

Editor's Note: Air Canada has ordered 45 Embraer 190s which are to be flown by the mainline carrier.