Regional jets (RJ) carry fewer passengers than mainline jets but generally travel at similar speeds, cruise at similar altitudes, and require runways of about the same length as mainline jets. The most common RJ models in service today are 50-passenger aircraft—the Bombardier CRJ100 and CRJ200 and the Embraer ERJ-145. Most RJs have a maximum flight range between 900 and 1,700 nautical miles. (See app. II for more detailed information about these aircraft.) Most RJs are operated by regional affiliates of major airlines rather than by the major airlines themselves. The relationship between the major carrier and the regional carrier can take several forms. Some relationships are contractual; for example, United Airlines (United) contracts with Atlantic Coast Airlines to fly passengers to and from United’s hub at Washington Dulles International Airport. By contrast, other carriers own all or some of their regional affiliates. For example, American Airlines (American) and Continental Airlines (Continental) own many of the carriers that operate for their regional affiliates, American Eagle and Continental Express. Likewise, Delta Air Lines (Delta) purchased two of its regional affiliates, Comair and Atlantic Southeast Airlines, in 1999. Major carriers may also purchase a partial interest in a regional carrier, as Northwest Airlines (Northwest) has done with Mesaba Airlines. RJs are part of a U.S. air transportation structure dominated by “hub-and- spoke” networks. Since the deregulation of U.S. commercial aviation in 1978, nearly all major carriers have developed such networks. Airline officials state that by bringing passengers from a large number of cities to one central location and redistributing these passengers to their intended destinations, an airline’s fleet can serve more cities than it could through direct “point-to-point” service. Airline networks generally have several hub cities. For example, Northwest has hubs in Minneapolis, Detroit, and Memphis, and American has hubs in Chicago, Dallas, and Miami. With hundreds of aircraft in operation, the airlines were providing RJ service to 157 cities and 482 city-pair markets in October 2000. Seventy- four percent of the cities receiving this service were large and medium- sized; only 8 percent were small, with populations under 100,000. Air carriers have placed almost 60 percent of their RJ service in markets they were already serving (“existing markets”) and have expanded their networks by instituting RJ service in markets that they previously were not serving (“new markets”). Much of the service to existing markets supplemented or replaced mainline jet service that the carriers provided in these markets. The airlines chose to establish new service at cities that either were beyond the practical operating range of turboprop aircraft or were perhaps too small to be profitably served by mainline jets, according to airline officials. However, the airlines have ordered hundreds more aircraft, many of which are smaller or larger than the predominantly 50- seat RJs currently in service. In the future, with these aircraft of varying size, the airlines may adjust their RJ deployment strategies to provide service in markets of varying size. As of October 2000, major U.S. passenger airlines and their regional affiliates had deployed almost 500 RJs. This represents a significant increase in RJ aircraft since 1997, when only 89 RJs were in service. Of the 486 RJs in U.S. domestic service in the fourth quarter of 2000, 86 percent were 50-seat Bombardier or Embraer aircraft. The remaining RJs were 32- or 37-seat Fairchild or Embraer RJs, both of which began commercial operations in the United States in 1999. The number of RJs that each carrier operates varies widely. For example, Delta operates 168 RJs—more than any other major U.S. passenger carrier, largely because of its relationship with Comair (the first regional airline to purchase and begin operating RJs extensively). Other major airlines whose regional affiliates have deployed relatively large numbers of RJs are Continental (92) and American (83). Figure 1 shows the number of RJs operated by major airlines as of October 2000 and the size of their RJ fleet compared with that of their total jet fleet. Just as the number of RJs in service has increased since 1997, so has the number of RJ departures. For example, in May 1997, there were 12,364 scheduled RJ departures, compared with 93,606 scheduled RJ departures in October 2000—an increase of 735 percent in 3-½ years. On average, each RJ in October 2000 made more than six departures per day. By comparison, overall mainline jet departures amounted to 492,331 in May 1997 and 537,697 in September 2000—a 9-percent increase. Although RJs are flying throughout the United States, about two-thirds of the cities with RJ service are located east of the Mississippi River. Figure 2 shows the location of the cities served by RJs as of October 2000. Industry experts believed that this geographic distribution can be explained by differences in population densities and distances between cities that made RJ service well suited for these markets. See appendix III for more detailed information on the U.S. cities with RJ service as of October 2000. Of the 157 cities served by RJs as of October 2000, only 13 (or 8 percent) were small cities—those with populations under 100,000. Five carriers— Delta, Continental, American, Northwest, and America West—provide RJ service to those cities. However, only three of these small cities (White Plains, New York; Traverse City, Michigan; and Bozeman, Montana) have RJ service from more than one air carrier. Figure 3 shows the distribution of cities that had received RJ service as of October 2000. Large and medium-sized cities have received the vast majority of RJ service. The airlines generally introduced RJ service in larger cities before expanding it to smaller cities. For example, of the cities gaining RJ service in or before 1997, 69 (or 79 percent) were cities that had populations over 250,000 while only 8 (9 percent) were small cities. This deployment pattern—in which airlines have decided to serve larger cities rather than small cities with RJs—remained consistent between 1997 and 2000. Only five additional small cities received RJ service between 1998 and October 2000. Larger cities also more often received RJ service from more than one carrier. Of the 157 cities that received RJ service, 94 received service from multiple carriers. Moreover, 77 of those 94 cities had populations of 250,000 or more. The growth in the number of cities that have received RJ service has been slowing since 1997. Of the 157 cities that were served by RJs in October 2000, 86 had begun to receive their service in or before 1997. Since then, however, air carriers initiated service to 34 cities in 1998, 22 cities in 1999, and 15 cities in 2000. Figure 4 shows the decreasing number of new cities served by RJs over time and further indicates that most of these cities are not small. As the total number of cities served by RJs has grown over time, so has the number of city pairs (or markets). As of October 2000, RJs were serving 482 markets. Of these 482 markets, we examined the 432 that received RJ service between January 1997 and October 2000. Air carriers were already serving the majority of these markets with turboprops or mainline jets before they introduced RJs. However, air carriers also used RJs to expand their networks by flying to cities they had not previously served. Almost 60 percent of the 432 markets were existing markets—that is, they were already receiving either mainline jet or turboprop service from the RJ carrier before it added the RJ operations. Specifically, RJs supplemented existing mainline jet and/or turboprop service in about 36 percent of the markets and replaced mainline jet or turboprop service in 24 percent of the markets. The remaining 41 percent were new markets that had not received service from that RJ carrier for at least 1 year before the carrier introduced RJ operations. Figure 5 breaks down the changes in types of service for the 432 RJ markets that have received RJ service since January 1997. Adding RJ operations to existing markets gave RJ carriers opportunities to change their levels of service in various ways. For instance, a carrier could upgrade its service by replacing or supplementing its existing turboprop service with RJs, because jet service is considered to be of higher quality than turboprop service. In other markets, airline officials told us, adding RJs allowed them to “right size” their existing mainline jet service. In other words, the air carrier replaced its existing mainline jet service (which might have been carrying relatively few passengers) with RJs, whose seating capacity better matched the existing passenger traffic. When air carriers added RJ service to existing markets, they adjusted the total seating capacity. For example, in eight markets where RJs replaced mainline jets between January and October 2000, the carriers decreased the total seating capacity. In five markets, the carriers increased the total seating capacity, even though they “downgraded” these markets to smaller- sized jets. By contrast, in markets where carriers replaced turboprops with RJs, they decreased the total seating capacity in one while increasing it in another nine. As a result, with RJs, the airlines have been able to maintain jet service (albeit with smaller aircraft) but have more often decreased the total seating capacity; where they have upgraded service from turboprop to jet aircraft, they have more often increased total capacity. According to airline officials, both approaches were consistent with the carriers’ competitive service goals. To date, carriers have seldom completely replaced turboprop service with RJ service. This has occurred in only 11 percent of the markets that have received RJ service since January 1997.