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Capacity Purchase Agreement (Cpa)

A capacity purchase agreement (CPA) is a commercial agreement between an airline and a regional carrier that allows the airline to purchase a set amount of capacity from the regional carrier. This agreement is typically entered into by airlines to access smaller markets and operate more efficiently.

The regional carrier operates the flights on behalf of the airline, using its own aircraft and crew. The airline pays the regional carrier a set fee for each flight operated under the CPA. This fee covers the cost of operating the flight, as well as a profit margin for the regional carrier.

The advantage of a CPA for airlines is that it allows them to expand into new markets without having to invest in additional aircraft or crew. By purchasing capacity from a regional carrier, airlines can offer flights to smaller markets that may not be profitable for the airline to operate on its own. This allows airlines to access new customers and increase their revenue.

Regional carriers also benefit from CPAs as they provide a reliable source of revenue. By operating flights on behalf of an airline under a CPA, regional carriers can ensure that their aircraft and crew are utilized efficiently. This allows them to reduce costs and generate a predictable stream of income.

CPAs can also provide benefits to passengers. By accessing smaller markets, airlines can offer more convenient travel options to their customers. Additionally, regional carriers may offer lower fares than larger airlines, making air travel more affordable for passengers.

In summary, a capacity purchase agreement is a commercial agreement between an airline and a regional carrier that allows airlines to expand into smaller markets without having to invest in additional aircraft or crew. This agreement provides reliable revenue for regional carriers and provides benefits to passengers by offering more convenient travel options and lower fares.