The scheduled passenger airline industry in the U.S. can be divided into three categories—legacy carriers, regional airlines and low-cost carriers, or LCCs. The U.S. airline industry has long been dominated by legacy carriers. The legacy carriers offer scheduled flights to most large cities within the United States and abroad and also serve numerous smaller cities. All legacy carriers have adopted the \"hub and spoke\" route system. This system concentrates most of an airline\'s operations at a limited number of hub cities, serving most other destinations in the system by providing one-stop or connecting service through the hub.

Regional airlines typically operate smaller aircraft on lower-volume routes under contract with major U.S. airlines. In contrast to LCCs, regional airlines generally do not try to establish an independent route system to compete with U.S. legacy carriers. Rather, regional airlines typically enter into relationships with one or more legacy carriers under which the regional airline agrees to use its smaller aircraft to carry passengers booked and ticketed by the legacy carrier between one of its hubs and a smaller outlying city.

In the year ended December 31, 2005, the total market for air travel was 746.9 million passengers, ahead of 634.5 million in 2004 and 599.9 million total passengers carried in the full year 2000, the last full year before the 9/11 attacks. LCCs have been gaining market share versus legacy carriers since 1995, gaining an average of 9.1 million domestic passengers a year between 1995 and 2005.

The Company owns 11 of its aircraft—three are owned free and clear, and eight are owned subject to financing scheduled to be fully paid over the next five years. An additional five aircraft are subject to capital leases under which the Company expects to take ownership within the next five years. The Company also has five aircraft currently under operating leases which have purchase options with seller financing in place it intends to exercise by the end of 2006. The Company leases the remaining three aircraft under operating leases, one of which expires in August 2006 and the two others of which expire on December 31, 2007, but can be returned to the lessor with 90 days advance notice.

Nine aircraft are dedicated to serving Las Vegas from 30 small cities and four are dedicated to serving Orlando from 13 small cities.

The Company operates a low-cost passenger airline marketed to leisure travelers in small cities, allowing it to sell air travel both on a stand-alone basis or bundled with hotel rooms, rental cars and other travel related services.

The Company presently does not have daily flights in any of its markets, nor does it generally offer multiple flights each day. In most cases, the Company offers two to four flights per week in each of its markets.

Scheduled service revenues increased 96.1% in the year ended December 31, 2005 compared to 2004.

Operating expenses for the year ended December 31, 2005 increased $40.9 million or 49.1% compared to the year ended December 31, 2004.

Aircraft fuel expense increased 88.3%, or $24.7 million, to $52.6 million in the year ended December 31, 2005 compared to $27.9 million in the year ended December 31, 2004.