American Airlines may be regretting its decision last year to unilaterally hike regional pilot pay to historically high levels, according to Raymond James analyst Savanthi Syth.

The Fort Worth, Texas-based carrier fundamentally changed the economics of regional flying when it raised pilot pay at its three wholly-owned affiliates — Envoy, Piedmont Airlines, and PSA Airlines — to nearly the level earned by its own pilots. The move doubled the cost of regional operations, which have long been a lower cost capacity option for major airlines like American to serve small cities and, at least as recently as October, had yet to solve the pilot staffing issues that American’s affiliates face. READ MORE