SkyWest Airlines 2015 Annual Report Download - page 27

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Our business could be harmed if we lose the services of our key personnel.
Our business depends upon the efforts of our chief executive officer, Russell A. Childs, and our other key
management and operating personnel. We may have difficulty replacing management or other key personnel who cease
to be employed by us and, therefore, the loss of the services of any of these individuals could harm our business. We do
not maintain key-person insurance on any of our executive officers.
Risks Related to the Airline Industry
We may be materially affected by uncertainties in the airline industry.
The airline industry has experienced tremendous challenges in recent years and will likely remain volatile for
the foreseeable future. Among other factors, the financial challenges faced by major and 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 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, Allegiant, Spirit 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, Southwest
and AirTran Airways, Inc. in 2011, United and Continental in 2010 and Delta and Northwest Airlines, Inc. in 2008. 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.