The regional airline industry could face mergers, liquidations and shifting business models as major carriers cut back on flights to smaller cities. Profit margins are being squeezed as a drop in demand emboldens the big airlines to seek better terms from their regional partners. Industry analyst Michael Boyd says high fuel prices undermine the economic logic of regional jets, and the number of such jets in the North American fleet could shrink by 17% from 2008 to 2010.

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