The quiet decline of regional aviation

The value of transportation is not measured by the number of seats, but by the connectivity it create

In the previous article, we discussed how a significant part of the current challenges facing European aviation stems not from the low-cost model itself, but from years of continuous capacity expansion.

However, there is another side to this story — one that is far less visible.

While airlines were ordering ever larger aircraft and airports were celebrating new passenger traffic records, Europe quietly lost a substantial part of its regional aviation network, and many airports were left without scheduled services.

Previously well-functioning regional connections disappeared. The role of 30-, 50-, 70-, and 100-seat aircraft gradually diminished. In most cases, these decisions were based on entirely rational business arguments: larger aircraft offered lower seat costs, and airlines sought simpler fleet structures.

Major hub airports enabled more concentrated operations, while rail transport became a competitive alternative on many routes.

Yet an important question remains: can it truly be considered a success if a region loses its direct connection to Frankfurt, Munich, or Zurich? Is it really progress if an airport’s passenger traffic grows while the economic connections of the surrounding region weaken?

Because the true value of aviation is not measured by passenger numbers, but by the quality of the connections it creates. For an export-oriented company, it is not important how many tourists arrive in the region each year. What matters is whether an employee can leave in the morning, attend a meeting in Frankfurt or Munich in the afternoon, and return the same day or at the latest the following day. For a university, international research accessibility is crucial. For an investor, it is the ease with which a region can be reached. For a conference or business event organiser, it is how easily participants can arrive.

This is connectivity. And while Europe was focusing on passenger numbers, in many places this very connectivity began to disappear.

Why did regional flights disappear?

Airlines gradually adopted a different logic. Faced with increasing competition from the rise of low-cost carriers, they introduced larger aircraft in pursuit of lower seat costs. Maintaining regional fleets increasingly appeared expensive.

The decline of regional aviation was not the result of a single decision or event. In reality, it was the outcome of several mutually reinforcing developments. The first and perhaps most important factor was the transformation of airline fleet strategies. During the 1990s and early 2000s, European aviation was largely built on the coexistence of aircraft of different sizes. Networks of regional airlines fed passengers into major hubs.

Lufthansa Regional, Air France Regional, British Airways CitiExpress, Austrian Arrows, and SAS Commuter were all operators without which today's European network aviation would have been unimaginable.

The system was simple: passengers from smaller regional airports were transported by 30-, 50-, or 70-seat aircraft to Frankfurt, Munich, Zurich, or Vienna, from where they could continue almost anywhere in the world through global airline networks.

A regional flight was often not spectacularly profitable on its own, but it played an indispensable role within the broader network.

Regional networks shrank, and smaller airports found it increasingly difficult to secure their place within the new system.

Lufthansa Has Not Given Up on Regional Connectivity

The Lufthansa example demonstrates that the future of regional aviation has not disappeared — it has merely taken a different form than it had twenty years ago.

The transformation of regional aviation does not mean that major network airlines have abandoned smaller markets. The Lufthansa Group is a good example of how the focus has shifted from eliminating regional connections to reorganising them.

Within this system, Air Dolomiti plays a particularly important role. The Italian airline is wholly owned by the Lufthansa Group and today serves as one of the most important regional partners feeding Lufthansa’s Munich and Frankfurt hubs. Operating Embraer 190 and Embraer 195 aircraft, it connects numerous European cities to Munich where operating an Airbus A320 or Boeing 737 would no longer be economically viable or justified.

Air Dolomiti’s success sends an important market signal. While much of European aviation has moved towards increasingly larger aircraft, the Lufthansa Group continues to invest significant resources in the 100–120-seat segment.

Munich illustrates this particularly well. The routes operated by Air Dolomiti are not valuable in themselves. The real product is access to and feed into Lufthansa’s and Star Alliance’s global network. The objective is access to the world.

The price of losing the 70–100 seat segment

From the airlines’ perspective, larger aircraft appeared to be the logical choice.

The seat cost of an Airbus A320 or Boeing 737 can be significantly lower than that of a smaller regional aircraft. The problem, however, is that demand did not grow everywhere at the same pace as capacity. On many regional routes, there was simply insufficient demand to economically operate a 180–220-seat aircraft. This was clearly demonstrated by several Balkan routes from Budapest operated under PSO arrangements by Wizz Air and supported by the NER government.

With the withdrawal of smaller aircraft, many regional feeder routes disappeared. In many cases, the decision was not between a larger and a smaller aircraft, but between maintaining a route and cancelling it entirely.

The primary losers of this process were not the airlines, but the regions themselves and their economic, cultural, and scientific life.

The economic value of connectivity

It is no coincidence that many successful industrial regions react particularly sensitively to changes in air connectivity.

In discussions about regional aviation, we often forget that flights do not exist for their own sake. Their purpose is to connect people, businesses, investments, and knowledge. For an export-oriented company, direct accessibility is often more important than a tax incentive. When multinational companies evaluate new investments, factors such as proximity to an international airport, the number of hub connections, daily flight frequencies, and access to global networks regularly appear among the key criteria.

Frankfurt, Munich, Zurich, and Amsterdam are not merely airports — they are gateways to economic activity. Those who are well connected to these gateways enjoy a competitive advantage. Those who lose these connections may also lose competitiveness.

Germany: When rail becomes both competitor and partner

The Deutsche Bahn and airline Rail & Fly system has effectively made rail transport part of the aviation network.

Germany provides a particularly interesting example of how domestic aviation and feeder services have evolved. The expansion of the ICE network has called into question the viability of numerous former domestic air routes, including those from Bremen, Stuttgart, and Cologne.

In itself, this is not a negative development. On the contrary, it can be highly beneficial from both environmental and passenger convenience perspectives. The real question is whether rail is treated as a competitor or as a partner.

Frankfurt Airport is an excellent example of how rail can become an integral part of aviation. The airport railway station receives hundreds of ICE trains every day, and a significant proportion of passengers now arrive in Frankfurt by train rather than aircraft before connecting to international flights.

The question, therefore, is not whether passengers travel by air or rail. The question is whether they gain access to the global network.

Switzerland: Perhaps Europe’s best example

The Swiss model may be the strongest proof that the success of transport systems should not be measured by the transport modes themselves or their capacity, but by the quality of the connectivity they create.

If any country has perfected this model, it is Switzerland. The cooperation between Swiss International Air Lines and the Swiss Federal Railways serves as a benchmark for many other countries. Passengers can purchase rail and air tickets within a single booking from almost any railway station. They receive connection guarantees, and in the event of train delays, the same rights apply as with traditional flight connections. In some cases, even frequent-flyer benefits are included.

The essence of the system is not the mode of transport, but connectivity.

Austria and Linz: When a region recognises its own interests

Companies in the region can reach almost any destination in the world with a single connection. The objective is therefore not to maximise passenger numbers. The objective is to maintain connectivity. This is precisely the way of thinking that has been missing from many European regions in recent years.

Austria offers a particularly interesting example of how the role of regional aviation has evolved over the past two decades.

While Vienna Airport has become an increasingly powerful international hub, smaller airports have gradually lost some of their former importance, a process in which the development of the Austrian railway network played a key role. Today, ÖBB’s Railjet network connects numerous Austrian cities quickly and reliably with Vienna and Vienna Airport.

Linz is an excellent example of a region recognising that certain connections are strategically important. Upper Austria is one of Austria’s strongest industrial regions. For export-oriented companies, tourist traffic is not the primary concern. What matters is maintaining fast and reliable access to the global economy.

The Frankfurt service is therefore not merely a transport link but also an economic development tool. The regional government, the airport, and the business community recognised this reality, resulting in the Danish airline DAT operating two daily flights between Linz and Frankfurt under a Lufthansa codeshare agreement.

At first glance, this may not appear particularly spectacular. Two flights a day. A relatively small regional airline.

In reality, however, the significance of the service is far greater. Through Frankfurt, Upper Austria gains direct access to the global network of Lufthansa and Star Alliance.

Pécs and Osijek: When the market is too small for two winners

One of the most important lessons from the Pécs story is that the success of regional aviation is not solely a matter of funding. Equally important are adequate flight frequency, proper network integration, and the actual size of the regional market.

In Hungary, the story of Pécs-Pogány Airport is particularly instructive. The project had political support, financing was available, an operator was in place, and an international route to a major hub was launched.

The Danish carrier DAT operated flights to Munich, supported by the Skyhub PAD virtual airline concept. On paper, everything appeared to be in place for success.

Reality, however, proved different, as the project faced several challenges simultaneously.

The first issue was flight frequency. Two weekly flights may be suitable for leisure or occasional travel, but rarely provide a genuine alternative for business travellers. Export-oriented companies and multinational corporations generally require daily or near-daily connectivity.

The second problem was delayed network integration. The Lufthansa codeshare agreement was not available from the outset. Yet for a regional service, Munich itself is often not the product. The real product lies beyond Munich — namely Lufthansa’s and Star Alliance’s global network.

The third issue was geographical. Osijek Airport is located less than 90 kilometres from Pécs and during the same period also offered connections to Munich through Croatia Airlines and the Star Alliance network. The two airports were effectively competing for the same regional market, and their schedules partially overlapped. Monday departures became direct competitors. The market, however, was simply not large enough to sustain two parallel Munich connections over the long term.

Debrecen: When the three conditions for successful regional operations come together

Debrecen demonstrates that regional aviation can still be successful today, but only if three conditions are fulfilled simultaneously: appropriate flight frequency, a strong network partner, and long-term regional commitment.

If Pécs represents the challenges, Debrecen represents the positive counterexample.

Lufthansa’s Munich services now operate six times per week. Capacity has gradually increased. The schedule is well suited for business travellers. The flights are fully integrated into Lufthansa’s network.

At first glance, this may seem like a minor difference, but it is in fact a crucial distinction.

Passengers from Debrecen are not simply flying to Munich. They gain access to Lufthansa’s entire global network.

This is the difference between point-to-point transportation and genuine network connectivity.

If any one of the three conditions for regional operations is missing, success becomes unlikely.

Norway and Greenland: When connectivity becomes a public interest

It is worth examining countries where market forces alone would be unable to provide the necessary connections.

Norway and Greenland demonstrate that, in certain circumstances, governments must play a role in maintaining connectivity.

One recurring question in debates about regional aviation is whether every route must be profitable. From a purely market-oriented perspective, the answer appears straightforward: yes. Reality, however, is considerably more complex. Transportation is not always merely a commercial service. In certain situations, it forms part of essential infrastructure, just like roads, railways, or energy systems.

Norway is perhaps Europe’s best-known example. Because of the country’s geography, many smaller communities would otherwise require considerable travel time by road or sea. Fjords, mountainous terrain, and sparsely populated regions mean that air transport is often not a luxury but a necessity. This is why Norway has operated a Public Service Obligation (PSO) system for decades.

The concept is simple: the state supports routes that would not be commercially sustainable but remain essential from economic and social perspectives. The objective is not to support airlines, but to connect communities, sustain economic activity, and ensure mobility.

A similar logic applies in Greenland. There, air transport is often not one alternative among many, but the only realistic connection to the outside world.

Maintaining Greenland’s airports and air services is therefore not merely a transportation policy issue but a matter of national strategy.

The key lesson from both examples is that the value of connectivity cannot always be measured solely through ticket sales and airline revenues.

The economic benefits of certain connections often extend far beyond an airline’s profit-and-loss statement.

Could the 70–100 Seat Aircraft Segment Experience a Renaissance?

In many cases, these aircraft match actual demand more precisely and make it possible to maintain routes that would no longer be economically viable with larger aircraft.

One of the most interesting questions of recent years is whether the market will rediscover the value of regional aircraft. The past two decades have clearly been characterised by the growing dominance of larger aircraft.

Airlines built much of their strategy around the Airbus A320 and Boeing 737 families. The logic was understandable: more seats, lower seat costs, greater efficiency. The problem is that demand did not grow at the same pace on every route.

This is where the importance of the 70–100–120 seat category re-emerges, represented by aircraft such as the Airbus A220, the Embraer E190 and E195, and the latest generation of ATR turboprops.

Rail and aviation are not enemies

Looking ahead, another important lesson is that the perceived competition between rail and aviation is often misunderstood. In successful systems, the two modes of transport do not work against each other; they strengthen each other.

Frankfurt, Munich, Zurich, Geneva, and Vienna all demonstrate how rail can assume the feeder role once performed by regional air services. This is not necessarily a loss, provided that connectivity remains intact.

The objective is not for one mode of transport to win, but for passengers to reach their destination as quickly, comfortably, and reliably as possible.

The winners of the future will likely be those regions that recognise this principle.

Conclusion

The decline of regional aviation is not primarily an aviation issue. It is an economic development issue.

While Europe has spent the past twenty years focusing on increasing capacity, the question of what types of connections we actually want to create has often been pushed into the background.

A region’s competitiveness is rarely determined by the number of tourists it receives each year. It is far more dependent on how easily it connects to the global economic bloodstream.Linz, Debrecen, Frankfurt, Zurich, and Norway’s PSO system all teach us the same lesson.

The importance of aviation does not lie in the size of aircraft, nor in passenger traffic records.

The winners of the next decade will not be those offering the greatest number of seats, but those regions and integrated transport systems that connect people, businesses, and economies most effectively.

Tamás Pakuts is an international tourism, hospitality, aviation, and mobility expert with nearly 35 years of professional experience across Europe and Asia, as well as more than 25 years of executive leadership experience in the hotel industry, hospitality, and tourism development.

Throughout his career, he has held executive, operational, consulting, training, and advisory positions with airlines, airports, hotels, cruise companies, tourism organisations, and international development projects.

What makes his professional background unique is his ability to combine expertise in aviation, hospitality, destination development, transportation, organisational development, and executive coaching at a high level.

As a hotel executive and consultant, he has successfully led hotel repositioning projects, organisational transformations, expansion programmes, and revenue optimisation initiatives. Several hotels that had previously faced significant operational and commercial challenges achieved record occupancy levels and outstanding business results under his leadership. In some cases, occupancy rates increased from below 25% to above 90%, while profitability and service quality remained sustainable.

He is the creator of the REVo Dynamic Revenue Optimization Method, one of Central Europe’s earliest dynamic hotel pricing and revenue optimisation systems, developed long before dynamic pricing became widely adopted throughout the industry. REVo-based pricing and sales strategies delivered significant occupancy growth, stronger market positioning, and improved financial performance for numerous hospitality businesses.

Under his leadership, hotels and hospitality operations received numerous national and international awards for quality, guest satisfaction, operational excellence, wellness services, and innovation.

Beyond the hotel industry, he has also been actively involved in the development of gastronomy and culinary tourism. As an advisor, he supported the work of the national culinary team, contributing his expertise in hospitality, service quality, training, and strategic development.

Within aviation, he has worked in airline management, aviation marketing, airport development projects, route development initiatives, and aviation consulting. The amendment of the Hungarian-Swiss bilateral aviation agreement, allowing the designation of additional operators alongside the national carriers, was achieved partly through his aviation law expertise and lobbying efforts. He founded one of Europe’s first virtual airlines and for years managed an air bridge connecting Kazakhstan’s oil and gas fields with the rest of the world.

He has participated in airport feasibility studies, airline business development projects, and transport development programmes linked to tourism, providing him with first-hand experience of the relationship between connectivity, accessibility, and tourism competitiveness.

At the launch of Debrecen Airport’s civilian operations, he provided the professional framework for ground handling services. He also played an active role in establishing international operations at Atyrau Airport in Kazakhstan and Cheboksary Airport in the Russian Federation.

His experience also includes leadership positions aboard river and ocean cruise vessels, where he managed multicultural teams, complex hotel operations, guest experience programmes, leadership development initiatives, and crisis management projects in international environments.

Alongside his operational achievements, he is a certified Executive Coach, Trainer, DISC Specialist, and Organisational Development Consultant. Over the years, he has delivered thousands of coaching, consulting, and training programmes for executives, hospitality professionals, tourism stakeholders, and service organisations.

He firmly believes that successful tourism development cannot be separated from transportation networks, infrastructure, accessibility, local communities, sustainability, and the overall visitor experience.

This philosophy also forms the foundation of Szalloda.blog, an independent professional platform dedicated to exploring the connections between tourism, hospitality, aviation, rail transport, mobility, destination development, and economic policy.

Today, he works as an international consultant, trainer, and industry expert across numerous countries in Europe and Asia, while regularly publishing independent analyses on the future of tourism, transportation, hospitality, and regional competitiveness.