Financing struggles loom for commuter airlines

With the help of deregulation, many of the larger US airlines have surrendered the smaller cities and "feeder" routes to the growing commuter airlines. The result has been unprecedented growth and, for some, high-flying profits. However, there have also been a number of problems, as recent National Transportation Safety Board hearings have shown.

The boom in short flights has given the 200 commuter airlines (about 30 are considered major commuters) problems in equipment, safety, security, airport space, and crew training. Labor organizing drives also are expected in the not-too-distant future.

Despite deregulation, the Federal Aviation Administration finds itself doing more regulating than ever before with the commuter carriers. Because of the increased number of passengers, the FAA has introduced new and more-stringent regulations governing aircraft operating procedures, crew training and supervision, and maintenance. It is believed unlikely that many of the present group of commuter airlines will be able to afford to comply.

While the commuter industry has been calling for relief from these tougher regulations, the National Transportation Safety Board hearings held last month in Washington gave little reason for softening the blow.

As in most industries today, capital financing is a problem and, when available, expensive. However, because of the current and projected growth patterns, there has been an unusual amount of investment capital available to the established operators. With the new regulations involving added crew training and maintenance costs and the pressure for new 30-, 40-, and 50 -passenger aircraft, the earlier projections on return on investment are in jeopardy.

Should the Air Line Pilots Association, through its new division for commuter airlines, make substantial headway in organizing the flight crews, current operating cost projections will be out the window.

At major airport terminals some operators are running into another set of problems. Gate space is at a premium, and airport authorities are not too enthusiastic about making the necessary investment in facilities for operators that do not produce major revenue. Jetport revenues are based substantially on the weight of the landing aircraft; thus most of the commuter airplanes qualify for little above the minimum landing fees

The limited counter space available in the terminals has also pushed these costs up. FAA demands for compliance with security screening regulations add another daily cost factor.

While all this may seem to add up to a bleak picture, in reality the future is quite bright for those commuter lines that survive. During the next 12-month period there will be a general "sorting out" of the commuter airline service, with the strong getting stronger and many of the present marginally financed operations falling by the wayside.

In addition, there will have to be a reappraisal of the role of the commuter carrier. For the most part the commuter lines categorize their operations as "feeders" to the major cities. But carriers such as Coleman Air Transport, with daily DC-9 service from Rockford, Ill., to La Guardia Airport in New York, and Altair's service from Philadelphia to North Carolina, to mention only a few, can only be described as regional. It seems that deregulation has brought about a third and fourth level of air service.