SkyWest Airlines 2009 Annual Report Download - page 42

commenced AirTran service with two aircraft in December 2009 and added three additional aircraft in
January and February of 2010. The code-share agreement has a three-year term; however, after
May 15, 2010, either party may terminate the agreement upon 120 days written notice.
As of December 31, 2009, SkyWest Airlines operated as a Delta Connection carrier in Salt Lake
City, a United Express carrier in Los Angeles, San Francisco, Denver, Chicago and the Pacific
Northwest, and a Midwest Connect carrier in Milwaukee and an AirTran carrier in Milwaukee,
operating more than 1,500 total daily flights.
ASA has been a code-share partner with Delta in Atlanta since 1984. As of December 31, 2009,
ASA operated as a Delta Connection carrier in Atlanta and Cincinnati. ASA operates approximately
780 daily flights, all in the Delta Connection system.
We provide a substantial majority of the regional airline service for Delta in Atlanta and Salt Lake
City. In connection with our acquisition of ASA in September 2005, we established new, separate, but
substantially similar, long-term fixed-fee Delta Connection Agreements with Delta for both SkyWest
Airlines and ASA. We also obtained the right to use 29 gates in the Hartsfield-Jackson International
Airport located in Atlanta, from which we currently provide service to Delta. Pursuant to the terms of
the Delta Connection Agreement executed by ASA and Delta, Delta has also agreed that if Delta
solicits requests for proposals to fly Delta Connection regional aircraft, ASA will be permitted to bid to
maintain the same percentage of total Delta Connection regional jet flights that it operated during
2007, and, if ASA does not achieve the winning bid for the proposed flying, ASA will be permitted to
match the terms of the winning bid to the extent necessary for ASA to maintain the same percentage
of Delta Connection regional jet flights that it operated during 2007.
On February 10, 2010, ASA and United entered into the ASA United Express Agreement,
pursuant to which ASA has agreed to operate 14 CRJ200 aircraft as a United Express carrier. On
February 11, 2010, ASA began operating as a United Express carrier, and we anticipate that the 14
United Express regional jets to be flown by ASA will be in operation by May of 2010. The ASA United
Express Agreement is a capacity purchase agreement with a five-year term, and other terms which are
generally consistent with the SkyWest Airlines United Express Agreement.
Historically, multiple contractual relationships have enabled us to reduce reliance on any single
major airline code and to enhance and stabilize operating results through a mix of contract flying and
our controlled or ‘‘pro-rate’’ flying. For the year ended December 31, 2009, contract flying revenue and
pro-rate revenue represented approximately 94% and 6%, respectively, of our total passenger revenues.
On contract routes, the major airline partner controls scheduling, ticketing, pricing and seat inventories
and we are compensated by the major airline partner at contracted rates based on the completed block
hours, flight departures and other operating measures. On pro-rate flights, we control scheduling,
ticketing, pricing and seat inventories and receive a pro-rated portion of passenger fares. For the year
ended December 31, 2009, essentially all of our Brasilia turboprops flown for Delta were flown under
pro-rate arrangements, while approximately 53% of our Brasilia turboprops flown in the United system
were flown under contractual arrangements, with the remaining 47% flown under pro-rate
arrangements. For the year ended December 31, 2009, approximately 96% of our CRJ200s flown in the
United system were flown under contractual arrangements, with the remaining 4% flown under
pro-rate arrangements. On November 4, 2009, SkyWest Airlines entered into a code-share agreement
with AirTran. Under the terms of the code-share agreement, SkyWest Airlines has agreed to operate
five CRJ200s for AirTran under a pro-rate arrangement. SkyWest Airlines commenced AirTran service
with two aircraft in December 2009 and added three additional aircraft in January and February of
2010.
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