Delta Airlines 2006 Annual Report Download - page 19

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. The federal government has on several occasions proposed a significant increase in the per ticket tax. Due to the weak
revenue environment, the existing tax has negatively impacted our revenues because we have generally not been able to increase our fares to pass these fees
on to our customers. Similarly, the proposed ticket tax increase, if implemented, could negatively impact our revenues.
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 liability to persons (other than employees or passengers) for claims resulting from acts of terrorism, war or similar events. At the
same time, aviation insurers significantly increased the premiums for such coverage and for aviation insurance in general. Since September 24, 2001, the U.S.
government has been providing U.S. airlines with war-risk insurance to cover losses, including those resulting from terrorism, to passengers, third parties
(ground damage) and the aircraft hull. The coverage currently extends through August 31, 2007. The withdrawal of government support of airline war-risk
insurance would require us to obtain war-risk insurance coverage commercially, if available. Such commercial insurance could have substantially less
desirable coverage than that currently provided by the U.S. government, may not be adequate to protect our risk of loss from future acts of terrorism, may
result in a material increase to our operating expenses or may not be obtainable at all, resulting in an interruption to our operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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