JetBlue Airlines 2007 Annual Report Download - page 23

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6:00 a.m. to 9:59 p.m. This rule had been scheduled to expire in late 2007 upon the enactment of a
permanent rule restructuring the rights of carriers to operate at LaGuardia. However, because the
permanent rule has not been issued, the FAA has extended the temporary rule. Under the current
rule, our operations remain unaffected. Should new rules be implemented in whole or in part, our
ability to maintain a full schedule at LaGuardia would likely be impacted.
Long Beach Municipal Airport is a slot-controlled airport as a result of a 1995 court settlement.
Under the settlement, there are a total of 41 daily non-commuter departure slots and a single slot is
required for every commercial departure. There are no plans to eliminate slot restrictions at the Long
Beach Municipal Airport. In April 2003, the FAA approved a settlement agreement among the City
of Long Beach, American Airlines, Alaska Airlines and JetBlue with respect to the allocation of the
slots, which also provides for a priority allocation procedure should supplemental slots above the
41 current slots become available. We have 28 slots available for use and currently operate
24 weekday roundtrip flights from Long Beach Municipal Airport to nine domestic cities.
Foreign Operations. International air transportation is subject to extensive government
regulation. The availability of international routes to U.S. carriers is regulated by treaties and related
agreements between the United States and foreign governments. We currently operate international
service to The Bahamas, the Dominican Republic, Bermuda, Aruba and Mexico. JetBlue also began
service to St. Maarten in January 2008. To the extent we seek to provide air transportation to
additional international markets in the future, we will be required to obtain necessary authority from
the DOT and the applicable foreign government.
Foreign Ownership. Under federal law and the DOT regulations, we must be controlled by
United States citizens. In this regard, our president and at least two-thirds of our board of directors
must be United States citizens and not more than 24.99%of our outstanding common stock may be
voted by non-U.S. citizens. We are currently in compliance with these ownership provisions.
Other Regulations. All air carriers are also subject to certain provisions of the Communications
Act of 1934 because of their extensive use of radio and other communication facilities, and are
required to obtain an aeronautical radio license from the FCC. To the extent we are subject to FCC
requirements, we will take all necessary steps to comply with those requirements. Our labor relations
are covered under Title II of the Railway Labor Act of 1926 and are subject to the jurisdiction of the
National Mediation Board. In addition, during periods of fuel scarcity, access to aircraft fuel may be
subject to federal allocation regulations. We are also subject to state and local laws and regulations at
locations where we operate and the regulations of various local authorities that operate the airports
we serve.
Civil Reserve Air Fleet. We are a participant in the Civil Reserve Air Fleet Program which
permits the United States Department of Defense to utilize our aircraft during national emergencies
when the need for military airlift exceeds the capability of military aircraft. By participating in this
program, we are eligible to bid on and be awarded peacetime airlift contracts with the military.
ITEM 1A. RISK FACTORS
Risks Related to JetBlue
We operate in an extremely competitive industry.
The domestic airline industry is characterized by low profit margins, high fixed costs and
significant price competition. We currently compete with other airlines on all of our routes. Many of
our competitors are larger and have greater financial resources and name recognition than we do.
Following our entry into new markets or expansion of existing markets, some of our competitors have
chosen to add service or engage in extensive price competition. Unanticipated shortfalls in expected
revenues as a result of price competition or in the number of passengers carried would negatively
impact our financial results and harm our business. The extremely competitive nature of the airline
industry could prevent us from attaining the level of passenger traffic or maintaining the level of fares
required to maintain profitable operations in new and existing markets and could impede our growth
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