Revolution in the Skies: SkyWest’s 25% Stake In Contour Airlines Ignites Industry Turmoil

SkyWest has been trying to start a new airline, SkyWest Charter, under part 135 rules. This would allow them to operate aircraft with up to 30 seats using pilots that have fewer than 1,500 hours of experience, and to use senior pilots from major airlines recently forced out by mandatory age 65 retirement.

This new carrier would operate subsidized Essential Air Service routes.

  • It’s one thing to pay a pilot $200,000, spread out across 100 or more passengers
  • It’s cost-prohibitive to pay that spread out across 8 or 15 passengers
  • As major airlines have hired pilots away from regional carriers, at higher wages, to address their own shortages the regionals have struggled
  • And less air service means more people driving longer distances (whether to their destination or to a larger airport). Driving is less safe than flying.

The Air Line Pilots Association led a charge against this, seeing it as an end-run around hard fought job protections. ALPA got Congress to impose six times the hours required in Europe for U.S. major airlines, to impose significant costs and time to become a pilot. This has helped to create a shortage of pilots and drive up wages.

To oppose SkyWest Charter, however, they also had to oppose premium Dallas-based carrier JSX because it benefited from those same rules. And once a regulatory assault on JSX was in play, Dallas-based American Airlines and Southwest Airlines joined in the attack. American Airlines explained to employees that their motivation is shutting down a competitor. Customers prefer flying out of private terminals, with all-first class regional jets, free bags and drinks and Starlink internet.

The FAA is considering whether to promulgate rules that would require public charters to follow the same rules as major carriers for use of pilots and terminals.

With the startup SkyWest Charter, which conforms to all current rules and regulations, mired in controversy though now flying SkyWest acquired a 25% stake in public charter carrier Contour Airlines and may acquire more.

[W]e recently completed the acquisition of a 25% stake of Contour airlines, a small operator in the Part 135 space, for $25 million. This minority interest stake strategically positions us to further monetize our existing CRJ assets through an asset provisioning agreement and to establish another pipeline for pilot supply. We will continue to evaluate opportunities to smartly and accretively deploy our capital.

SkyWest Charter, or SWC, has continued to successfully complete on-demand charter flying since it began operations last year. We continue to believe that SWC is the best possible answer for small community air service. And regardless of the status of our pending application for commuter authority at DOT, we’re pleased with the strong demand for SkyWest’s product and are very optimistic about its future.

It’s expected that Contour will apply for Essential Air Service routes that SkyWest Charter would have flown.

SkyWest sought an FAA exemption to allow them (as a part 121 carrier) to provide training to SkyWest Charter (a part 135 carrier), arguing that it would enhance safety to offer higher level training. ALPA even objected to that.

American Airlines owns a stake in and codeshares with bankrupt Brazilian carrier Gol, despite that airline not applying U.S. pilot rules that the carrier maintains are crucial to safety. They are willing to market flights with Gol pilots as American Airlines flights. American also codeshares with Contour.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. outstanding and good for SkyWest. They have always been a very well run airline.

    All OO has to do is tell AA and any other major airline that opposes Contour or SkyWest Charter that SkyWest cannot fly for AA, DL or UA if their pilots oppose Contour.
    The big 3 will all fall in place real fast or else pay the price for absorbing their large regional jets on their mainline pilot seniority lists at mainline rates.

    The big 3 will fall into place real fast and they will tell their pilot unions to stay in their own lane.

  2. As best I can tell, it is not one pilot but rather two and they would fly many flights a year for their pay, not just one so the cost would be spread over several thousand passengers or more. Yes, a part of the ticket price would go to paying the pilot’s pay and additional costs like Social Security and medical. If there is one flight attendant, that would also be a charge. Ground services, airport charges, etc. all have to be paid for as well as part of the cost of the aircraft, the fuel and the maintenance. Since these flights are in addition to the pilots already having retirement set up and there currently being enough qualified pilots, the pilots may be willing to fly at a rate much less than the top pay for pilots at the largest USA airlines. After all, what other work can they do that they are willing to do and also has jobs open?

  3. I love this. I wish there had to be an announcement at the beginning of the flight that the pilot does not meet the standards to be able to fly an aircraft of more than 30 people and then gun it down the runway.

    The government should eliminate essential air service. It is welfare to rural people. Why should everyone else have to pay so you can live literally in the middle of nowhere?

  4. I sat in MCE across from a newly retired AA pilot last summer and mentioned the newly started battle between JSX and AA, SW, and ALPA. He was not aware of the details but he probably is now. He had been flying for a public charter (cannot recall which one) less than a year. I asked him why ALPA insists on keeping mandatory retirement at 65 when nearly all its pilots (those born in 1960 and earlier) do not reach SSA full retirement age until they are 67. His answer, “power and greed at ALPA.”

  5. To the public, there’s no difference between Part 121 and Part 135. It’s an airplane sold by the seat (unlike pure charter). Why is it ok to the FAA for Part 135 pilots to have significantly lower experience to transport humans? That is the most ridiculous part of this government regulation. Both should have the same rules applied. I would bet most of the flying public have no idea how little experience the pilots at JSX and Contour have, yet FAA doesn’t require any disclosure about the difference to those flying on them.

  6. Joseph: I had a Captain on a JSX flight who was recently retired training captain from a major airline and had 20,000 hours. Should we slap a “My last ride was a 777” sticker on the side? The minimums set by the FAA are ludicrous, as has been spoken about ad nauseum. Much of there rest of the world through ab initio training puts someone in the right seat of a widebody with less than 1000 hours. Should we ban US carriers from codesharing with the likes of Lufthansa then?

    Essential Air Service is a very low cost program that more than pays for itself in economic return in many cities. It isn’t unlimited welfare…there are parameters the markets have to fall within and targets to hit, such as maximum subsidy per passenger carried and some average passenger levels. Cities can and do fall out of the program for not performing.

    Contour has done a very good job in particular with a number of its markets actually taking the passenger volumes to levels not seen in decades, like at a Muscle Shoals, AL, where the airport gets into a higher level of annual FAA funding due to higher enplanements, and the subsidy decreases or in some cases ends up going away.

    This is smart of Skywest. And Tim is right that Skywest has a lot of leverage. There are not a lot of other carriers who could backfill them and they know it. Look at United and the mess with Mesa.

  7. @Joseph: Because people who live in Wyoming, Idaho, Montana, South Dakota, North Dakota, Alaska, Maine, and West Virginia elect 2 senators each. And if those states are gonna get some, all the other states want some too. Politicians would have you believe that government welfare mostly goes to unemployed minorities with gaggles of children in inner cities, but the reality is most of it goes to rural white people – with more going to land/business owners.

    EAS has gotten especially ridiculous with the regional pilot shortage though… My closest airport is EAU. When EAS got us 2 flights a day to Chicago, that made a LITTLE sense. Now it’s Sun Country flights to Minneapolis (that’s a bus/car route) and non-daily seasonal service to Vegas or Ft Myers or Orlando. That’s a total waste of money.

    Side note: I would absolutely take a regional jet out of EAU with a 250 hour co-pilot over driving to MSP for a 1500 hour co-pilot.

  8. @Christopher Raehl, in absolute numbers more social safety net receivers are from the majority and not the minorities. How if you look at as per capita, one minority group gets a lot more help than the majority and the other minority groups. This works for most categories of social security net receivers. My numbers come from the census bureau (census gov library stories 2022 05 who is receiving social safety net benefits). Where is your data coming from?

  9. To those that argue that a pilot is a pilot, the airline unions themselves argue that is not true but demanding much higher rates to fly a large jet than a small jet even though an A350 or B787 is far more automated and with better systems than a B737, (esp. a MAX)

    Of course, pilot unions want to make the argument for the basis of economics but it is illogical and we all know it… which raises the question of how much experience it really takes to be a commercial airline pilot.

    Since it is entirely possible to have airline captains with one year of seniority and unions can’t argue against it, it is clear that there is nowhere near the connection between experience above a certain level and seniority as some want to argue.

    given that other countries make a lower experience first officer than allowed in the US work and they don’t have crashes more often in the US, the US system obviously isn’t the only viable set up

  10. You guys all don’t know wtf you’re talking about, so how about we listen to an airline pilot who’s willing to keep it real…

    Experience matters, so too does the individual in question. It’s that simple. A 250 hr pilot without any professional experience could be as good as a 1,500 hr pilot, potentially.

    The point of regulation is to create a blanket policy. We have to create some kind of baseline. If you non pilot people want to imply that hours have no relevancy then let’s remove all pilot certification requirements and go full ab initio in the simulator for both FO’s and captains.

    The benefit of the 1,500hr rule is that it creates a market place for flight instructors to exist and teach new student pilots. Most people who build their hours from commercial pilot certification (250 hrs) to R-ATP mins (~1000 hrs) do so by flight instructing. Virtually nobody pays for those hours. People who imply that have no idea wtf they’re talking about.

    If you get rid of the R-ATP requirement for FO’s you’d run out of CFI’s real cast creating quite the bottleneck and far less student pilot progression into commercial pilots.

    Why can’t we acknowledge that just because Europe does one thing doesn’t mean it’s right. I’d like to see the actual crash incident numbers between different countries and their respective certification requirements. I’d be willing to guess that the US is the safest among all 1st world countries and that’s attributed to our pilot culture here and higher standards for training.

    Airline FO’s, whether it’s 121 or 135 shouldn’t be coming into the fold without prior experience. We already made compromises with the R-ATP certificate.. y’all are just looking to shake us down, and for what purpose?

  11. To say SkyWest has leverage is laughable. They are paid a premium for every departure, so much that if they went out on their own…they would fail. They have zero infrastructure for reservation or ticket sales. If they left United or Delta they’d be forced to close down. The only reason to start SkyWest charter was the fact they have worn out CRJ 200 that no one wants. This article fails to mention the hour requirement was raised due to Colgan 3407. The fact Europe has less hour requirements has zero to do with US requirements. They have vastly different training programs and training standards. The military also allows pilots to fly aircraft with fewer hours. Extremely senior fighter pilots rarely have more than 3000 hours total.

  12. The big question is what does United think of all this as vrtually all the Essential Airline service Skywest flies is as United Express.

    Does this mean that suddenly Scottsbluff and Hays are going to have their service with Contour, branded and served as Contour. Will those and other cities currently flow with EAS subsidies by Denver Air Connection meet the same fate?

    No more seamless global travel and no more UA oversight of their business?

    Or will Contour try to shift it’s EAS service to integrate with UA, which should be quite a trick because right now it has a mishmash of EAS flights to AA hubs.

  13. Something had to shake out with all this Part 135. Right now you have Contour and Denver Air Connection flying the exact same EMB-145’s as Commuteair and Piedmont, but with lesser qualifications.

  14. johnny,
    if the only reason (or even a large one) is to provide CFIs, then the program should have been scrapped yesterday.
    There are many ways to ensure enough CFIs are available including by paying them a premium to what they would earn as a pilot; that is far more economical for the system as a whole than to require that everyone have requirements that are too high.

    Experience matters – but only up to so much. ALPA cannot tell us exactly what that number is but since foreign pilots don’t crash planes at any more regularity than US pilots, it is worth a legitimate discussion as to what that number should be.

    In the absence of a willingness to do real studies and analysis, then every attempt to do runarounds should be valid.

  15. According to Skywest, they have 16 CRJ’s available for Skywest Charter and it sounds like they intend to use Contour pilots for them. That would make sense as that would mean they would have a new pool of Part 135, but not Part 121, qualified pilots.

    I’ll bet there are plenty of Contour pilots that would love to get more hours in.

  16. @johnny

    How many guys and gals hired this century, with the requisite 1500 hours, have flown inverted or supersonic? The era of hiring The Right Stuff for commercial is over; the general public has no idea that airbus drivers fly with a joystick. The guys and gals with Armed Services experience are a diminishing resource that is incredibly valuable to our NATIONAL SECURITY because of the wisdom they can impart to the kids, and the vast majority of these 66-year old retirees have it.

    What’s the average number of flight hours combined in the left and right seats at Envoy, Piedmont and PSA?

    The 66-year old retiree in the left seat at JSX, SWC or Contour has twice the hours and i would much rather have the kid in the right seat learning from a 66-year old guy/gal at FL350.

    I wonder if the MAX simulators have modified their scenarios for sudden decompression.

  17. @dougie

    re: your retired AA pilot, he wouldn’t know forkall about ALPA because AA drivers are represented by the Allied Pilots Association (APA)

  18. @Tim Dunn

    1. Who exactly is going to ensure an economical wage for pilots to delay their careers and stick around as CFI’s? This isn’t a centrally planned industry. It’s a market place, and the CFI position for the vast majority of pilots were a time building endeavor completely independent of financial well being. Pilots would traditionally work for crap wages to build flight time for the next step. Good luck finding CFI’s to train pilots if we’re brand new commercial pilots are going straight to new hire training at skywest.

    2. Perhaps ALPA can’t tell you what exactly is the right number, neither can you. As i’ve mentioned theres no consistent number for each person. A baseline number needs to be created. If you think FO’s dont need ATP certification experience, should the captain? Can we hire street hire captains straight out of college with 200 hours total time as allowed in Part 141 programs? Do you see the FO position as an apprentice position? Do you have actual data from europe and asia on incident and accident statistics relative to experience requirements?

    Lastly, what makes you think that removing the ATP requirements for FO’s are going to sustainably open the pipieline for new pilots? In the short term, for the next 12 months that would immediately increase the number of pilots available to the industry, but after that’s been tapped out you’re back to square one. Youre not seeing a pilot shortage because people are turned off from needing to build hours to meet R-ATP mins.. that usually takes 1-1.5 years for a typical CFI. The pilot shortage occurred because of decades of poor career progression for pilots thousands of pilots in the last few decades, working for poor wages in the regional industry and poor quality of life.

    The new age millennial and gen z crowd are seeing online just how crappy this career has been and are making different life choices. The only way to solve the shortage is to make the career an attractive choice.

  19. @Hagbard Celine

    I’m gonna be frank with you dawg… wtf are you talking about? Since when do airline pilots need experience flying supersonic or inverted. Since when are those type of skills applicable to today’s 121 environment. You sound like one of those military pilots that think civilian pilots are inferior..

    Some of the worst airline pilots i’ve flown with are former fighter pilots with poor understanding of working in a crew environment, a poor attitude, unwilling to learn from civilian captains, and drink like they’re stuck on a military cruise liner burning our tax dollars..

  20. johnny,
    how about the concept that airlines provide pathways and pay the CFIs – that is more and more what the big US carriers are doing – which is in line w/ what happens elsewhere in the world?
    If airlines need pilots, they provide and control larger parts of the process instead of expecting pilots to come fully qualified other than a type rating.

    2. If ALPA can’t tell me or anyone else what the right number of hours needed is then they shouldn’t be telling us that any number less than current law is unacceptable. It’s not a hard concept to understand. If you don’t have facts and data to back up your position, then don’t be so dogmatic that you and you alone have the truth.

    and airlines talk about DEI and making flying more acceptable but the reason why it is a job only so few can attain is because of the huge financial preparation that pilots have to make in order to move at all into the profession if they go the fully civil aviation track.

    airlines will always be a 24 X 7 job that involves a certain amount of standby travel, lots of time zones etc. And you can’t use drugs – which rules out a whole lot of people.
    Paying more money doesn’t make up for all or any of that. blocking potentially very competent people because they can’t afford the job **is** the definition of exclusivity and does nothing to make the job more attractive.

  21. Tim Dunn, you get an atta boy from me.

    To those who talk about the 1500 rule and the Colgan 3407 accident… it was an overreaction to something not even really a cause. The pilots were fatigued because one commuted all night from Seattle on FedEx then napped on a couch in a break room and the other up from Florida. I would rather have a pilot who cut their teeth flying hours 250-1000 in the right seat of an Embraer with a retired airline guy in the left seat than drilling holes with a student around the same square of farmland in severe VFR day after day. And yes military folks especially fighter pilots only get 200 or so hours a year.

    The 1500 hr ATP requirement only makes sense in relation to Colgan if you want to make the argument that it is the cause to massively inflate entry level pilot wages so maybe they can afford better commutes or to live where they are based, avoiding the type of fatigue situation at play there. Plus you had a Captain with a history of doing poorly in check rides and certificate rides, so that bears some scrutiny too.

  22. Essential air services is not simply ‘welfare for rural people.’ Wealthy as well as very wealthy people live in these markets as well. If non-city dwellers are going to be punished for having regional airports as an option by having that taken away, then you might as well take away other services like fire and rescue, emergency response, etc. The idea that people should be forced to fly out of major hubs is absurd. FAA rules are not set in stone. Rules need to be rewritten to fit reality and circumstances.

  23. @ Tim Dunn

    I’d like to preface this by saying i do enjoy your writing and your perspectives. I dont fly for delta but i agree with your assessment of their relative success compared to other legacy carriers.

    “how about the concept that airlines provide pathways and pay the CFIs”
    Great idea.

    If they actually removed the R-ATP requirement for new FO’s and the airlines continued their in house flight schools, and subsequently required every graduate to do a year or two of working as a CFI before moving on to their regionals, how would that change things? youre still delaying the progression of newly minted commercially certificated pilots to regional FO’s in the same amount of time it would take them to get R-ATP flight mins.

    The same would occur if you jacked up a CFI’s salary to convince them to delay their seniority progression at a regional.. and frankly, most people wouldn’t do that, hence why youre seeing regional pilots ditch their flow through agreement to get on with a competing legacy.

    Frankly, i dont see any viable way of scaling up CFI’s at the airline’s in house flight training school to meet the demand for pilots in any significant way. The throughput at United’s aviate academy, and the schools that AA and Delta have a just a drop in the bucket compared to the number of flight schools and collegiate programs throughout the country.

    Sure, if you drop the RATP requirements you’d immediately have a lot of CFI’s available to get regional fo jobs, but what happens a year later? A huge bottleneck of new student pilots and no CFI’s to teach them. Perhaps the marketplace will figure something out, but you certainly haven’t.

    In regards to what the right number of hours is, perhaps an inquiry to the FAA in regards to how they’ve come to the conclusion that 250 hours is enough to be commercially certificated, and 1500 to acquire an ATP was deduced. All that has been done since colgan air, was require that BOTH pilots have an ATP certificate. Later in 2013, the downward revision with the creation of the restricted atp certificate was invented to address the very concern that you have atm.

    Again, show me that european and asian airline flying has a lower incident rate than in the US and i’ll give you more credence for pushing the removal of ATP mins. But as far as i’m concerned, anecdotally speaking of course, it appears that US produces the best trained pilots compared to other 1st world societies. Our general aviation culture and marketplace has yielded far more pilot candidates than in any other country and that allows the airlines to hire ready made pilots with actual experience, rather than hiring off the street non pilots and turn them into airbus right seat operators and apprentices for the eventual captain/ pilot position.

    The civilian route to an airline pilot career is expensive, but lets clarify, nobody is actually paying for flight time out of their pocket to go from 250 to 1500 hours. 99% of people are building that time through instructing, GA jobs, small cargo and 91 charter ops. This expensive endeavor combined with low paying regional jobs, lack of certainty in long term progression to a higher paying legacy carrier job is the main reason we have a pilot shortage today. Give it some time, eventually with the quick progression and increased pay, there will be more pilots moving through the pipeline to fill those jobs. Those market changes take time to occur but they will eventually.

    There are other high paying careers that require a large initial investment. Why complain about exclusivity with pilots when being a doctor, lawyer, CPA, among many other professions require huge educational up front investments as well?? Should we water down the experience requirements for doctors as well to help expedite their availability to the health care market place?

  24. SkyWest is an exceptionally well run airline with excellent maintenance, superb training, outstanding leadership with professional pilots.

    Their acquisition will be a truly symbiotic relationship. Their mechanics have 20+ years experience on CRJs, they have access to parts and their aircraft are in great condition.

    Gaining access to fly EAS through Contour will raise the bar for current part 135 operators.

    Having flown with SkyWest, Contour and the major airlines, I firmly believe the hour requirements must remain and the standards and regulations for flying EAS should be stringent and well regulated.

    A great way to develop professional pilots!

    I believe this accusation is a very positive move.

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