Continental Airlines on Friday officially selected Chautauqua Airlines to provide and operate 44 regional jets as a Continental Express carrier beginning in 2007, filling a void created earlier this year when the Major failed to reach agreement with ExpressJet on a new capacity purchase deal to keep the Regional's 69 aircraft flying under the CO code.Continental announced three months ago that it had chosen Chautauqua, a subsidiary of Republic Airways Holdings, as a replacement (ATWOnline, April 19) and now has firmed an agreement that will see the Regional operate 50-seat RJs on behalf of CO. The Major will continue to schedule and market all of its Continental Express service.

"In selecting Chautauqua, we've identified a Regional operator that can uphold our high standards for reliable, quality service, while delivering that service at competitive rates," CO Chairman and CEO Larry Kellner said.

According to Chautauqua, CO will purchase all capacity at predetermined rates and industry standard pass-through costs. The first aircraft is expected to be placed into service next January and the last in July. All aircraft covered by the agreement will be leased by Chautauqua from third-party lessors and all fuel will be purchased directly by CO and will not be charged back to Chautauqua.

Continental said it has no plans to bridge the capacity gap between Chautauqua's 44 planes and ExpressJet's 69, noting that the additional 25 aircraft are not currently necessary.