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American Airlines Charges Higher Regional Costs For Providing More Connected Flights
Even among all the other airlines, the American airline provides more than 30% more unique connection pairs throughout the entire country. American airlines have no major competition in the country, so they can provide more unique combinations of routes and more coverage hence increasing the passenger yields even in smaller areas.
In the June of 2022, the American government announced that they would be increasing the pay rate of the pilots throughout their 3 owned regional affiliates. The three of them are Envoy, Piedmont Airlines, and PSA Airlines. This helped to level the gaps between the pay rates of the regional affiliate pilots and the mainstream pilots within 2 years. This decision was something that the investors were also waiting for.
This step was fundamental for the airline industry of America as it addressed many issues faced by the American airline industry. According to the American executives, one of the major problems that were resolved by this step was the shortage of pilots that was being faced by most of the regional airlines.
Even though increasing the pay rates of the pilots also means an increase in the cost of the overall expenses for undertaking the operations. But as Vasu Raja stated, this would also lead to higher yields. American airlines believe this step will increase the total revenue by up to 12 to 14 percent. This increase in the total revenue will be enough to balance the expense suffered by increasing the pay rates of the pilots.
The extra yields generated through this step could be used when the US airlines add one more regional affiliate in the next year. Even though we live in a world where fuel prices are high and are expected to get even higher with time, it is expected that American Airlines would be able to deal with it.
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