SkyWest Airlines 2006 Annual Report Download - page 30

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airlineindustry, there will be lasting consequences of the attacks, includingincreased security and
insurance costs, increased concerns about future terrorist attacks, increased government regulation and
airport delays dueto heightened security. Additional terrorist attacks and thefear of such attacks could
negatively impact the airline industry, andresult in furtherdecreasedpassengertraffic andyields,
increased flight delays or cancellations associated with new government mandates, as well as increased
security, fuel and other costs. We cannot provide any assurance that these events will notharm the airline
industry generally or our operations or financial condition in particular.
Fuelcosts have adversely affected, and may continue to adversely affect, the operations and financial
performance of the airline industry.
Theprice of aircraft fuel is unpredictable and increased significantly during much of 2006. Higher fuel
pricesmay lead to higherairfares, which wouldtend to decrease thepassenger load of our code-share
partners. In thelongrun, such decreases will likely have an adverse effect on the number of flights such
partner will ask us to provide and therevenuesassociated with such flights. Additionally, fuel shortages
have been threatened. The future cost andavailability of fuel to us cannot be predicted, and substantial
fuel cost increasesor the unavailability of adequate supplies of fuel may have amaterial adverse effect on
ourresults of operations. During periods of increasing fuel costs, ouroperating margins have been, and
will likely continue to be,adversely affected.
We are subject to significant governmental regulation.
All interstate aircarriers, including SkyWest AirlinesandASA, aresubject to regulation by the DOT,
theFAAand other governmental agencies. Regulationspromulgated by the DOTprimarily relate to
economic aspects of air service. The FAA requiresoperating, air worthiness and other certificates;
approval of personnel who mayengage in flight, maintenance or operation activities; record keeping
proceduresin accordance with FAA requirements;and FAA approval of flight training and retraining
programs. We cannot predict whether we will be able to comply with allpresent andfuture laws,rules,
regulations andcertification requirements or thatthe cost of continued compliance will not have amaterial
adverse effect on our operations. We incur substantialcosts in maintaining our current certifications and
otherwise complying with the laws, rulesand regulations to which we aresubject. A decision by the FAA to
ground, or require time-consuming inspections of or maintenance on, all or any of our aircraft for any
reason mayhave amaterial adverse effect on our operations. In addition to state and federalregulation,
airportsand municipalities enact rules and regulations that affect our operations. From time to time,
various airports throughout the country have considered limiting the use of smalleraircraft, suchas our
aircraft, at such airports. Theimposition of any limits on theuse of our aircraft at any airportatwhich we
operate couldhave a material adverseeffecton our operations.
The occurrence of an aviation accident would negatively impact ouroperationsand financial condition.
An accident or incident involving one of our aircraft could result in significant potential claims of
injured passengers andothers,as well as repair or replacement of adamaged aircraft andits consequential
temporary or permanent loss from service. In the event of an accident, our liability insurance may not be
adequate to offset our exposure to potential claims and we may be forced to bear substantial lossesfrom
theaccident. Substantial claims resultingfroman accident in excess of our related insurance coverage
would harm our operational and financial results. Moreover, any aircraft accident or incident, evenif fully
insured, couldcause a public perception that ouroperations arelesssafe or reliablethan other airlines.