SkyWest Airlines 2014 Annual Report Download - page 34

regional carriers and continuing hostilities in the Middle East and other regions have significantly
affected, and are likely to continue to affect, the U.S. airline industry. These events have resulted in
declines and shifts in passenger demand, increased insurance costs, increased government regulations
and tightened credit markets, all of which have affected, and will likely continue to affect, the
operations and financial condition of participants in the industry, including us, major carriers (including
our major partners), low-cost carriers, competitors and aircraft manufacturers. These industry
developments raise substantial risks and uncertainties, which will likely affect us, major carriers
(including our major partners), competitors and aircraft manufacturers in ways that we are unable to
currently predict.
The airline industry is highly competitive and has undergone a period of consolidation and transition leaving
fewer potential code-share partners.
The airline industry is highly competitive. We not only compete with other regional airlines, some
of which are owned by or operated as code-share partners of major airlines, but we also face
competition from low-cost carriers and major airlines on many of our routes. Low-cost carriers such as
Southwest and JetBlue among others, operate at many of our hubs, resulting in significant price
competition. Additionally, a large number of other carriers operate at our hubs, creating intense
competition. Certain of our competitors are larger and have significantly greater financial and other
resources than we do. Moreover, federal deregulation of the industry allows competitors to rapidly
enter our markets and to quickly discount and restructure fares. The airline industry is particularly
susceptible to price discounting because airlines incur only nominal costs to provide service to
passengers occupying otherwise unsold seats. Increased fare competition could adversely affect our
operations and the price of our common stock. The airline industry has undergone substantial
consolidation, including the merger between American and US Airways in 2013, United and
Continental in 2010, Delta and Northwest Airlines, Inc. in 2008, as well as the merger of Southwest
and AirTran Airways, Inc. (‘‘AirTran’’) in 2011. Any additional consolidation or significant alliance
activity within the airline industry could limit the number of potential partners with whom we could
enter into code-share relationships and could have a material adverse effect on our relationships with
our code-share partners.
Due, in part, to the dynamic nature of the airline industry, major airlines may also make other
strategic changes such as changing or consolidating hub locations. If our major partners were to make
changes such as these in their strategy and operations, our operations and financial results could be
adversely impacted.
Terrorist activities or warnings have dramatically impacted the airline industry, and will likely continue to do
so.
The terrorist attacks of September 11, 2001 and their aftermath have negatively impacted the
airline industry in general, including our operations. The primary effects experienced by the airline
industry include a substantial loss of passenger traffic and revenue. If additional terrorist attacks are
launched against the airline industry, there will be lasting consequences of the attacks, which may
include loss of life, property damage, increased security and insurance costs, increased concerns about
future terrorist attacks, increased government regulation and airport delays due to heightened security.
Additional terrorist attacks and the fear of such attacks could negatively impact the airline industry,
and result in further decreased passenger traffic and yields, 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 not harm the airline industry generally or our
operations or financial condition in particular.
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