ExpressJet July Traffic Falls 20% As DOT Looks Into Flight Delay

ExpressJet Holdings Inc. (XJT), the U.S. airline operator at the center of the latest furor over "stranded" passengers, on Tuesday reported a 20% drop in July traffic, compared with a year earlier.

The Houston-based regional made no comment in its traffic release on the weekend incident, when a flight from its home base to Minneapolis/St. Paul was diverted by bad weather, leaving passengers stuck on the aircraft for six hours.

The flight reawakened the debate over a long-mooted "passenger bill of rights" in the U.S. and, in an unusual move, saw transportation secretary Ray LaHood question whether ExpressJet - which operated the flight for the Continental Express arm of Continental Airlines Inc. (CAL) - had violated any laws. The incident also marks a blow for ExpressJet, which operates most of Continental's regional services under a tougher contract after almost losing its franchise a year ago.

It is looking at flying for other airlines and has also launched a charter service aimed at companies and travelers to sports and entertainment events. "Now our job is to introduce ourselves to the rest of the industry," said chief executive Jim Ream in an interview last week with Dow Jones.

ExpressJet's revenue passenger miles, a key industry metric, rose 6.7% last month over June, in line with sector rivals. They fell sharply from a year ago after shedding a contract to fly for Delta Air Lines Inc. (DAL) and ending its own-brand scheduled services. Network carriers have aggressively trimmed flying by regional partners in the wake of the sharp decline in passengers and average fares.

ExpressJet provides the bulk of regional service for Continental, which also received a letter from LaHood asking what happened to the Minneapolis flight, and what the carrier did to mitigate the delay.

In a blog entry, the transportation secretary said that there are no mandatory requirements for airlines in handling flight delays, but said his department may introduce requirements as part of a proposed rule-making. Some lawmakers are pushing for a three-hour limit before passengers must be allowed off a delayed aircraft.

"We will use the information Continental provides to help us reach a decision about what direction to go in that rulemaking," said LaHood on his official blog.

The likelihood of action from DOT would appear to be increasing, given its high-profile involvement in the Continental Express flight. A similar and well-publicized incident in April involving a Delta flight elicited neither a blog entry nor a published letter to the carrier from LaHood.

Continental said it is co-operating with probes into the weekend delay, while ExpressJet was not immediately available for further comment.

-By Doug Cameron, , Dow Jones Newswires; 312-731-6910; [e-mail]

(Josh Mitchell contributed to this article)