Delta Airlines 2003 Annual Report Download - page 25

Table of Contents
made significant investments in check-in kiosks, Delta Direct phone banks and related initiatives across the system. The performance and reliability of our
technology is critical to our ability to attract and retain customers and our ability to compete effectively. In this challenging business environment, we may not
be able to continue to make sufficient capital investments in our technology infrastructure to deliver these expected benefits.
In addition, any internal technology error or failure, or large scale external interruption in technology infrastructure we depend on, such as power,
telecommunications or internet, may disrupt our technology network. Any individual, sustained or repeated failure of our technology could impact our
customer service and result in increased costs. Like all companies, our technology systems may be vulnerable to a variety of sources of interruption due to
events beyond our control, including natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues.
While we have in place, and continue to invest in, technology security initiatives and disaster recovery plans, these measures may not be adequate or
implemented properly.
The airline industry is subject to extensive government regulation, and new regulations may increase our operating costs.
Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs. For instance, the FAA from time to time
issues directives and other regulations relating to the maintenance and operation of aircraft that necessitate significant expenditures. We expect to continue
incurring expenses to comply with the FAA's regulations.
Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly increase the cost of airline
operations or reduce revenues. For example, the Aviation and Transportation Security Act, which became law in November 2001, mandates the federalization
of certain airport security procedures and imposes additional security requirements on airports and airlines, most of which are funded by a per-ticket tax on
passengers and a tax on airlines. Due to the weak demand and revenue environment, this action has negatively impacted our revenues because we have not
been able to increase our fares to pass these fees on to our customers.
Furthermore, we and other U.S. carriers are subject to domestic and foreign laws regarding privacy of passenger and employee data that are not consistent
in all countries in which we operate. In addition to the heightened level of concern regarding privacy of passenger data in the United States, certain European
government agencies are initiating inquiries into airline privacy practices. Compliance with these regulatory regimes is expected to result in additional
operating costs and could impact our operations and any future expansion.
Our insurance costs have increased substantially as a result of the September 11 terrorist attacks, and further increases in insurance costs or reductions
in coverage could have a material adverse impact on our business and operating results.
As a result of the terrorist attacks on September 11, 2001, aviation insurers significantly reduced the maximum amount of insurance coverage available to
commercial air carriers for
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