LUV » Topics » Airport capacity constraints and air traffic control inefficiencies could limit the Companys growth; changes in or additional governmental regulation could increase the Companys operating costs or otherwise limit the Companys ability to conduct business.

These excerpts taken from the LUV 10-K filed Feb 2, 2009.

Airport capacity constraints and air traffic control inefficiencies could limit the Company’s growth; changes in or additional governmental regulation could increase the Company’s operating costs or otherwise limit the Company’s ability to conduct business.

Almost all commercial service airports are owned and/or operated by units of local or state government. Airlines are largely dependent on these governmental entities to provide adequate airport facilities and capacity at an affordable cost. Similarly, the federal government singularly controls all U.S. airspace, and airlines are completely dependent on the FAA to operate that airspace in a safe, efficient, and affordable manner. As discussed above under “Business — Regulation,” airlines are also subject to other extensive regulatory requirements. These requirements often impose substantial costs on airlines. The Company’s results of operations may be affected by changes in law and future actions taken by governmental agencies having jurisdiction over its operations, including, but not limited to:

 

   

Increases in airport rates and charges;

 

   

Limitations on airport gate capacity or other use of airport facilities;

 

   

Increases in taxes;

 

   

Changes in the law that affect the services that can be offered by airlines in particular markets and at particular airports;

 

   

Restrictions on competitive practices;

 

   

The adoption of statutes or regulations that impact customer service standards, including security standards; and

 

   

The adoption of more restrictive locally-imposed noise regulations.

Airport capacity constraints and air traffic control inefficiencies could limit the Company’s growth; changes in or additional governmental regulation could increase the Company’s operating costs or otherwise limit the Company’s ability to conduct business.

Almost all commercial service airports are owned and/or operated by units of local or state government. Airlines are largely dependent on these governmental entities to provide adequate airport facilities and capacity at an affordable cost. Similarly, the federal government singularly controls all U.S. airspace, and airlines are completely dependent on the FAA to operate that airspace in a safe, efficient, and affordable manner. As discussed above under “Business — Regulation,” airlines are also subject to other extensive regulatory requirements. These requirements often impose substantial costs on airlines. The Company’s results of operations may be affected by changes in law and future actions taken by governmental agencies having jurisdiction over its operations, including, but not limited to:

 

   

Increases in airport rates and charges;

 

   

Limitations on airport gate capacity or other use of airport facilities;

 

   

Increases in taxes;

 

   

Changes in the law that affect the services that can be offered by airlines in particular markets and at particular airports;

 

   

Restrictions on competitive practices;

 

   

The adoption of statutes or regulations that impact customer service standards, including security standards; and

 

   

The adoption of more restrictive locally-imposed noise regulations.

Airport capacity constraints and air traffic control inefficiencies could limit the Company’s growth; changes in or
additional governmental regulation could increase the Company’s operating costs or otherwise limit the Company’s ability to conduct business.

FACE="Times New Roman" SIZE="2">Almost all commercial service airports are owned and/or operated by units of local or state government. Airlines are largely dependent on these governmental entities to provide adequate airport facilities and capacity
at an affordable cost. Similarly, the federal government singularly controls all U.S. airspace, and airlines are completely dependent on the FAA to operate that airspace in a safe, efficient, and affordable manner. As discussed above under
“Business — Regulation,” airlines are also subject to other extensive regulatory requirements. These requirements often impose substantial costs on airlines. The Company’s results of operations may be affected by changes in
law and future actions taken by governmental agencies having jurisdiction over its operations, including, but not limited to:

 







  

Increases in airport rates and charges;

 







  

Limitations on airport gate capacity or other use of airport facilities;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Increases in taxes;

 







  

Changes in the law that affect the services that can be offered by airlines in particular markets and at particular airports;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Restrictions on competitive practices;

 







  

The adoption of statutes or regulations that impact customer service standards, including security standards; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

The adoption of more restrictive locally-imposed noise regulations.

FACE="Times New Roman" SIZE="2">The airline industry is intensely competitive.

As discussed in more detail above under
“Business — Competition,” the airline industry is extremely competitive. Southwest’s competitors include other major domestic airlines, as well as regional and new entrant airlines, and other forms of transportation,
including rail and private automobiles. Southwest’s revenues are sensitive to the actions of other carriers in capacity, pricing, scheduling, codesharing, and promotions.

STYLE="margin-top:18px;margin-bottom:0px; margin-left:2%">Southwest’s low cost structure is one of its primary competitive advantages, and many factors could affect the Company’s ability to
control its costs.

Southwest’s low cost structure has historically been one of its primary competitive advantages; however, it
has limited control over many of its fixed costs. For example, Southwest’s ability to adjust compensation and benefit costs is limited by the terms of its collective bargaining agreements. Other factors that can impact Southwest’s ability
to control costs include the price and availability of jet fuel, aircraft airframe or engine repairs, regulatory requirements, and ability to access capital or financing at competitive rates. Given, in particular, the recent volatility in fuel
prices and the number of pending labor negotiations, Southwest cannot guarantee that it will be able to maintain its current level of low cost advantage. In addition, a key contributor to Southwest’s low cost structure is its use of a single
aircraft type, the Boeing 737. Although Southwest is able to purchase some of these aircraft from parties other than Boeing, most of its purchases are direct from Boeing. Therefore, if

 


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Southwest were unable to acquire additional aircraft from Boeing, or Boeing were unable or unwilling to provide adequate support for its products,
Southwest’s operations could be adversely impacted. In addition, Southwest’s dependence on a single aircraft type could result in downtime for part or all of its fleet if mechanical or regulatory issues relating to the Boeing 737 aircraft
type were to arise. However, given the Company’s years of experience with the Boeing 737 aircraft type and its longterm relationship with Boeing, the Company believes the advantages of operating a single fleet type outweigh the risks of its
single aircraft strategy.

As discussed above under “Item 1. Business-Insurance,” Southwest carries insurance of types customary
in the airline industry and is also provided supplemental, first-party, war-risk insurance coverage by the federal government at substantially lower premiums than prevailing commercial rates. If the supplemental coverage is not extended,
Southwest could incur substantially higher insurance costs. In addition, in the event of an accident involving Southwest aircraft, Southwest could be responsible for costs in excess of its related
insurance coverage, which costs could be substantial. Any aircraft accident, even if fully insured, could also have a material adverse effect on the public’s perception of Southwest.

STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> 





Item 1B.    UnresolvedStaff Comments

None.

STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> 





Item 2.Properties
This excerpt taken from the LUV DEF 14A filed Apr 10, 2008.
Airport capacity constraints and air traffic control inefficiencies could limit the Company’s growth; changes in or additional governmental regulation could increase the Company’s operating costs or otherwise limit the Company’s ability to conduct business.
 
Almost all commercial service airports are owned and/or operated by units of local or state government. Airlines are largely dependent on these governmental entities to provide adequate airport facilities and capacity at an affordable cost. Similarly, the federal government singularly controls all U.S. airspace, and airlines are completely dependent on the FAA to operate that airspace in a safe, efficient, and affordable manner. As discussed above under “Business — Regulation,” airlines are also subject to other extensive regulatory requirements. These requirements often impose substantial costs on airlines. The Company’s results of operations may be affected by changes in law and future actions taken by governmental agencies having jurisdiction over its operations, including, but not limited to:
 
  •  Increases in airport rates and charges;
 
  •  Limitations on airport gate capacity or other use of airport facilities;
 
  •  Increases in taxes;
 
  •  Changes in the law that affect the services that can be offered by airlines in particular markets and at particular airports;
 
  •  Restrictions on competitive practices;


B-13


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  •  The adoption of regulations that impact customer service standards, such as security standards; and
 
  •  The adoption of more restrictive locally-imposed noise regulations.
 
These excerpts taken from the LUV 10-K filed Feb 4, 2008.
Airport capacity constraints and air traffic control inefficiencies could limit the Company’s growth; changes in or additional governmental regulation could increase the Company’s operating costs or otherwise limit the Company’s ability to conduct business.
 
Almost all commercial service airports are owned and/or operated by units of local or state government. Airlines are largely dependent on these governmental entities to provide adequate airport facilities and capacity at an affordable cost. Similarly, the federal government singularly controls all U.S. airspace, and airlines are completely dependent on the FAA to operate that airspace in a safe, efficient, and affordable manner. As discussed above under “Business — Regulation,” airlines are also subject to other extensive regulatory requirements. These requirements often impose substantial costs on airlines. The Company’s results of operations may be affected by changes in law and future actions taken by governmental agencies having jurisdiction over its operations, including, but not limited to:
 
  •  Increases in airport rates and charges;
 
  •  Limitations on airport gate capacity or other use of airport facilities;
 
  •  Increases in taxes;
 
  •  Changes in the law that affect the services that can be offered by airlines in particular markets and at particular airports;
 
  •  Restrictions on competitive practices;


11


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  •  The adoption of regulations that impact customer service standards, such as security standards; and
 
  •  The adoption of more restrictive locally-imposed noise regulations.
 
Airport
capacity constraints and air traffic control inefficiencies
could limit the Company’s growth; changes in or additional
governmental regulation could increase the Company’s
operating costs or otherwise limit the Company’s ability to
conduct business.



 



Almost all commercial service airports are owned
and/or
operated by units of local or state government. Airlines are
largely dependent on these governmental entities to provide
adequate airport facilities and capacity at an affordable cost.
Similarly, the federal government singularly controls all
U.S. airspace, and airlines are completely dependent on the
FAA to operate that airspace in a safe, efficient, and
affordable manner. As discussed above under
“Business — Regulation,” airlines are also
subject to other extensive regulatory requirements. These
requirements often impose substantial costs on airlines. The
Company’s results of operations may be affected by changes
in law and future actions taken by governmental agencies having
jurisdiction over its operations, including, but not limited to:


 
























































  • 

Increases in airport rates and charges;
 
  • 

Limitations on airport gate capacity or other use of airport
facilities;
 
  • 

Increases in taxes;
 
  • 

Changes in the law that affect the services that can be offered
by airlines in particular markets and at particular airports;
 
  • 

Restrictions on competitive practices;





11





Table of Contents





 


























  • 

The adoption of regulations that impact customer service
standards, such as security standards; and
 
  • 

The adoption of more restrictive locally-imposed noise
regulations.


 




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