Alaska Airlines and Horizon Air 2013 Annual Report Download - page 104

of airline operations or reduce the demand for air
travel. Although lawmakers may impose these
additional fees and view them as “pass-through”
costs, we believe that a higher total ticket price
will influence consumer purchase and travel
decisions and may result in an overall decline in
passenger traffic, which would harm our
business.
The airline industry continues to face potential
security concerns and related costs.
The terrorist attacks of September 11, 2001 and
their aftermath negatively affected the airline
industry, including our company. Additional
terrorist attacks, the fear of such attacks or
other hostilities involving the U.S. could have a
further significant negative effect on the airline
industry, including us, and could:
• significantly reduce passenger traffic and
yields as a result of a potentially dramatic
drop in demand for air travel;
• significantly increase security and insurance
costs;
• make war risk or other insurance
unavailable or extremely expensive;
• increase fuel costs and the volatility of fuel
prices;
• increase costs from airport shutdowns, flight
cancellations and delays resulting from
security breaches and perceived safety
threats; and
• result in a grounding of commercial air
traffic by the FAA.
The occurrence of any of these events would
harm our business, financial condition and
results of operations.
We rely on third-party vendors for certain
critical activities.
We have historically relied on outside vendors for
a variety of services and functions critical to our
business, including airframe and engine
maintenance, ground handling, fueling, computer
reservation system hosting, telecommunication
systems, and information technology
infrastructure and services. As part of our cost-
reduction efforts, our reliance on outside vendors
has increased and may continue to do so in the
future, especially since we rely on timely and
effective third-party performance in conjunction
with many of our technology-related initiatives. In
addition, in recent years, Alaska and Horizon
have subcontracted their heavy aircraft
maintenance, fleet service, facilities
maintenance, and ground handling services at
certain airports, including Seattle-Tacoma
International Airport, to outside vendors.
Even though we strive to formalize agreements
with these vendors that define expected service
levels, our use of outside vendors increases our
exposure to several risks. In the event that one
or more vendors go into bankruptcy, ceases
operation or fails to perform as promised,
replacement services may not be readily
available at competitive rates, or at all. If one of
our vendors fails to perform adequately, we may
experience increased costs, delays, maintenance
issues, safety issues or negative public
perception of our airline. Vendor bankruptcies,
unionization, regulatory compliance issues or
significant changes in the competitive
marketplace among suppliers could adversely
affect vendor services or force us to renegotiate
existing agreements on less favorable terms.
These events could result in disruptions in our
operations or increases in our cost structure.
Our operations are often affected by factors
beyond our control, including delays,
cancellations, and other conditions, which
could harm our business, financial condition
and results of operations.
Like other airlines, our operations often are
affected by delays, cancellations and other
conditions caused by factors largely beyond our
control.
Other conditions that might impact our
operations include:
• lack of a national airline policy;
• lack of operational approval (e.g. new
routes, aircraft deliveries, etc.) due to
government shutdown;
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