Delta Airlines 2015 Annual Report Download - page 21

TableofContents
RiskFactorsRelatingtotheAirlineIndustry
The global airline industry is highly competitive and, if we cannot successfully compete in the marketplace, our business, financial condition and operating
results will be materially adversely affected.
Theairlineindustryishighlycompetitive,markedbysignificantcompetitionwithrespecttoroutes,fares,schedules(bothtimingandfrequency),services,
products,customerserviceandfrequentflyerprograms.Consolidationintheairlineindustry,theriseofwell-fundedgovernmentsponsoredinternationalcarriers,
changesininternationalalliancesandthecreationofimmunizedjointventureshavealteredandwillcontinuetoalterthecompetitivelandscapeintheindustryby
resultingintheformationofairlinesandallianceswithincreasedfinancialresources,moreextensiveglobalnetworksandcompetitivecoststructures.
Ourdomesticoperationsaresubjecttocompetitionfromtraditionalnetworkcarriers,includingAmericanAirlinesandUnitedAirlines,nationalpoint-to-point
carriers,includingAlaskaAirlines,JetBlueAirwaysandSouthwestAirlines,anddiscountcarriers,someofwhichmayhavelowercoststhanwedoandprovide
serviceatlowfarestodestinationsservedbyus.Point-to-point,discountandultralow-costcarriers,includingSpiritAirlinesandAllegiantAir,placesignificant
competitivepressureonnetworkcarriersinthedomesticmarket.Asaresult,wefacesignificantcompetitionatourdomestichubandgatewayairportseither
directlyatthoseairportsoratthehubsofotherairlinesthatarelocatedincloseproximitytoourhubsandgateways.Wealsofacecompetitioninsmallerto
medium-sizedmarketsfromregionaljetoperationsofothercarriers.Ourabilitytocompeteinthedomesticmarketeffectivelydepends,inpart,onourabilityto
maintainacompetitivecoststructure.Ifwecannotmaintainourcostsatacompetitivelevel,thenourbusiness,financialconditionandoperatingresultscouldbe
materiallyadverselyaffected.
Ourinternationaloperationsaresubjecttocompetitionfrombothforeignanddomesticcarriers.Competitionisincreasingfromgovernment-ownedand-funded
carriersintheGulfregion,includingEmirates,EtihadAirwaysandQatarAirways.Thesecarriershavelargenumbersofinternationalwidebodyaircraftonorder
andareincreasingservicetotheUnitedStatesfromtheirhubsintheMiddleEast.Severalofthesecarriers,alongwithcarriersfromChina,IndiaandSoutheast
Asia,aregovernment-subsidized,whichhasallowedthemtogrowquickly,reinvestintheirproductandexpandtheirglobalpresenceattheexpenseofU.S.
airlines.
Throughallianceandothermarketingandcodesharingagreementswithforeigncarriers,U.S.carriershaveincreasedtheirabilitytosellinternational
transportation,suchasservicestoandbeyondtraditionalEuropeanandAsiangatewaycities.Similarly,foreigncarriershaveobtainedincreasedaccesstointerior
U.S.passengertrafficbeyondtraditionalU.S.gatewaycitiesthroughtheserelationships.
Inaddition,severaljointventuresamongU.S.andforeigncarriershavereceivedgrantsofantitrustimmunityallowingtheparticipatingcarrierstocoordinate
schedules,pricing,salesandinventory.
Increasedcompetitioninboththedomesticandinternationalmarketsmayhaveamaterialadverseeffectonourbusiness,financialconditionandoperating
results.
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.Theindustryisheavilytaxed.Forexample,theAviationandTransportationSecurityActmandatesthefederalizationofcertainairportsecurity
proceduresandimposessecurityrequirementsonairportsandairlines,mostofwhicharefundedbyapertickettaxonpassengersandataxonairlines.Additional
taxesandfees,ifimplemented,couldnegativelyimpactourresultsofoperations.
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