A very common comment that you’ll come across when engaging in the popular aviation discourse is that route X to Y will be a good size for **insert type of regional jet**. The context will be in relation to a thinner regional route, for example when Bonza went bankrupt in April 2024, many comments were that many/most of their routes would have been better suited to smaller aircraft like a 100 seat E190 as opposed to the 186 seat B737-8 aircraft they were flying.
The comment isn’t misplaced as many/most of Bonza’s routes didn’t have sufficient demand to fill 186 seats at a price that was able to cover their costs and earn a sufficient profit to generate the required return on assets. This is important as Bonza’s administrators specifically pointed to their pricing as one of the reasons for their failure. The administrators calculated Bonza's average fare at A$ 104, 26% lower than market average of A$ 141.
Essentially, in order to fill aircraft sufficiently, Bonza were having to price tickets too low to cover their costs. The challenge is that had Bonza raised their prices they likely would have seen lower passenger numbers. Higher prices would have resulted in some customers switching to alternatives like other airlines, connecting options or even driving. Furthermore, lower prices were stimulating demand, and thus higher prices would have failed to stimulate demand.
So smaller aircraft would have been more sustainable, however there is a key problem as the smaller the aircraft, the higher the unit cost. Therein lies one of the most misunderstood dynamics in the business: the cost dynamics of regional jets. Let’s explore …