Airlines give propellers another spin

By Justin Bachman

updated 3:20 p.m. ET April 30, 2008

Queue up at Newark, N.J., for the 8:10 a.m. Continental Express flight to Baltimore, and you may be startled to find what many people consider a throwback to the 1970s: A plane driven by propellers, not jet engines. Get ready for more of them. The soaring cost of fuel is rapidly reshaping the landscape for regional flights at many airlines, leading to interest in a new generation of turboprop planes.

Most of the props are being deployed on trips of less than 500 miles. Beyond that, the economic advantages of a small jet kick in. For example, turboprops are now used heavily on routes such as Newark to Toronto; Seattle to Portland, Ore.; and San Jose, Calif., to Boise, Idaho. The two main beneficiaries of this trend are Montreal's Bombardier and the French-Italian aerospace joint venture ATR.

Alaska Air Group's regional subsidiary, Horizon Air, announced on Apr. 24 that it would convert its entire fleet to Bombardier's 76-seat Q400 prop within two years. "Through its combination of passenger comfort, speed, and efficiency, the Q400 is the best aircraft for the majority of our markets," Horizon Air President and Chief Executive Jeff Pinneo said in a prepared statement.

In October, German discount carrier Air Berlin decided to supplement its 124-jet fleet with its first-ever turboprops on shorter hauls, selecting the Q400. Earlier this year, Continental began deploying Q400s from its Newark hub to 10 cities served by regional partner Colgan Air, in a move to add greater seat capacity without the expense of larger jets. That airport's traffic is now controlled by federally supervised slots, as are other New York-area airports. "One of the main things we like about it is that, compared with a regional jet, we get almost 50% more seats in the air for each arrival/departure slot used," Continental spokesman Dave Messing said in an e-mail message. "We also get that extra capacity with virtually no extra cost vs. the jet."

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These shifts are a nod to the airline industry's radically changed finances as crude oil flirts with $120 a barrel. The cost of jet fuel is up more than 60% in the past year. The move from smaller jets to larger craft—both jet and turboprop—is coming as airlines race to cut costs and find new revenues. Fares have surged 10.2% in the past 12 months, including a 3% jump in March, according to new inflation data from the Bureau of Labor Statistics. The airlines have also imposed a bevy of new luggage and seat-assignment fees this year.

The backbone of U.S. regional flying, the 50-seat jet, made a splash in the 1990s as a way for airlines to serve smaller destinations and to bolster frequencies on heavy-traffic routes. The higher fuel-burn rates of jets wasn't much of a factor then, since crude oil traded below $12 per barrel in late 1998 and didn't breach $40 until 2004. On Apr. 29, crude was at $115.61 a barrel, a day after setting a new record of $119.93.

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