Delta Airlines 2014 Annual Report Download - page 23

Proposals to address congestion issues at certain airports or in certain airspace, particularly in the Northeast U.S., have included concepts such as
“congestion-based” landing fees, “slot auctions” or other alternatives that could impose a significant cost on the airlines operating in those airports or
airspace and impact the ability of those airlines to respond to competitive actions by other airlines. In addition, the failure of the federal government to
upgrade the U.S. air traffic control system has resulted in delays and disruptions of air traffic during peak travel periods in certain congested markets.
The failure to improve the air traffic control system could lead to increased delays and inefficiencies in flight operations as demand for U.S. air travel
increases, having a material adverse effect on our operations. Failure to update the air traffic control system in a timely manner, and the substantial
funding requirements of an updated system that may be imposed on air carriers, may have an adverse impact on our financial condition and results of
operations.
Future regulatory action concerning climate change, aircraft emissions and noise emissions could have a significant effect on the airline industry.
For example, the European Commission adopted an emissions trading scheme applicable to all flights operating in the European Union, including
flights to and from the U.S. While enforcement of the scheme has been deferred until April 2017, if fully implemented, we expect that this system
would impose additional costs on our operations in the European Union. Other laws or regulations such as this emissions trading scheme or other U.S.
or foreign governmental actions may adversely affect our operations and financial results, either through direct costs in our operations or through
increases in costs for jet fuel that could result from jet fuel suppliers passing on increased costs that they incur under such a system.
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 U.S., 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.
Prolonged periods of stagnant or weak economic conditions could have a material adverse effect on our business, financial condition and
operating results.
As a result of the discretionary nature of air travel, the airline industry has been cyclical and particularly sensitive to changes in economic
conditions. Because we operate globally, with almost 35% of our revenues from operations outside of the U.S., our business is subject to economic
conditions throughout the world. During periods of unfavorable economic conditions in the global economy, demand for air travel can be significantly
impacted as business and leisure travelers choose not to travel, seek alternative forms of transportation for short trips or conduct business through
videoconferencing. If unfavorable economic conditions occur, particularly for an extended period, our business, financial condition and results of
operations may be adversely affected. In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies, and
the imposition of exchange controls or other currency restrictions, may have a material adverse effect on our liquidity, financial conditions and results
of operations.
Terrorist attacks, geopolitical conflict or security breaches may adversely affect our business, financial condition and operating results.
Potential terrorist attacks, geopolitical conflict or security breaches, or fear of such events, even if not made directly on or involving the airline
industry, could negatively affect us and the airline industry. The potential negative effects include increased security, insurance costs, impacts from
avoiding flight paths over areas in which conflict is occurring, reputational harm and other costs and lost revenue from increased ticket refunds and
decreased ticket sales. If any or all of these events occur, they could have a material adverse effect on our business, financial condition and results of
operations.
The rapid spread of contagious illnesses can have a material adverse effect on our business and results of operations.
The rapid spread of a contagious illness, or fear of such an event, can have a material adverse effect on the demand for worldwide air travel and
therefore have a material adverse effect on our business and results of operations. Moreover, our operations could be negatively affected if employees
are quarantined as the result of exposure to a contagious illness. Similarly, travel restrictions or operational issues resulting from the rapid spread of
contagious illnesses in a part of the world in which we operate may have a materially adverse impact on our business and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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