SkyWest Airlines 2013 Annual Report Download - page 78

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2013
(1) Nature of Operations and Summary of Significant Accounting Policies (Continued)
The following summarizes the significant provision of each code share agreement the Company has
with each major partner:
Delta Connection Agreements
Number of Pass through costs Performance
aircraft under Term / Termination or costs paid directly Incentive
Agreement contract Dates by major partner Structure Payment Structure
SkyWest Airlines • CRJ 200 - 41 • The contract • Fuel • No financial • Rate per block
Delta Connection • CRJ700 - 19 expires on an • Engine performance hour, per
Agreement • CRJ 900 - 32 individual aircraft Maintenance based incentives departure and per
basis beginning in • Landing fees, aircraft under
2014 Station Rents, contract
• The final aircraft Deice
expires in 2022 • Insurance
• The average
remaining term of
the aircraft under
contract is
5.8 years
• Upon expiration,
aircraft may be
renewed or
extended
ExpressJet Delta • CRJ 200 - 76 • The contract • Fuel • Performance • Rate per block
Connection • CRJ700 - 41 expires on an • Engine based financial hour, per
Agreement • CRJ 900 - 28 individual aircraft Maintenance incentives departure and per
basis beginning in • Landing fees, aircraft under
2014 Station Rents, contract
• The final aircraft Deice Insurance
expires in 2022
• The average
remaining term of
the aircraft under
contract is
4.4 years
• Upon expiration,
aircraft may be
renewed or
extended
SkyWest Airlines • EMB 120 - 9 • Terminate with • None • None • Pro-rata sharing
Prorate Agreement • CRJ200 - 8 120 days notice of the passenger
fare revenue
SkyWest Airlines and ExpressJet are each parties to a Delta Connection Agreement with Delta,
pursuant to which SkyWest Airlines and ExpressJet provide contract flight services for Delta. The
SkyWest Airlines and ExpressJet Delta Connection Agreements contain multi-year rate reset provisions
beginning in 2010 and continuing each 5th year thereafter. The Delta Connection Agreements also
provide that, beginning with the fifth anniversary of the execution of the agreements (September 8,
2010), Delta has the right to require that certain contractual rates under those agreements shall not
exceed the second lowest of all carriers within the Delta Connection program. During the fourth
quarter of 2010, SkyWest Airlines and ExpressJet reached an agreement with Delta on contractual rates
satisfying the 2010 rate reset provision and the second-lowest rate provision and agreed to rates
through December 31, 2015. Delta additionally waived its right to require that the contractual rates
payable under the Delta Connection Agreements shall not exceed the second-lowest rates of all carriers
within the Delta Connection program through December 31, 2015.
73