Spirit Airlines 2011 Annual Report Download - page 33

In general, any changes in airport operations could have a material adverse effect on our business, results of operations and financial
condition.
We rely on third-party service providers to perform functions integral to our operations.
We have entered into agreements with third-party service providers to furnish certain facilities and services required for our operations,
including ground handling, catering, passenger handling, engineering, maintenance, refueling, reservations and airport facilities as well as
administrative and support services. We are likely to enter into similar service agreements in new markets we decide to enter, and there can be
no assurance that we will be able to obtain the necessary services at acceptable rates.
Although we seek to monitor the performance of third parties that provide us with our reservation system, ground handling, catering,
passenger handling, engineering, maintenance services, refueling and airport facilities, the efficiency, timeliness and quality of contract
performance by third-party service providers are often beyond our control, and any failure by our service providers to perform their contracts
may have an adverse impact on our business and operations. For example, in 2008, our call center provider went bankrupt. Though we were able
to quickly switch to an alternative vendor, we experienced a significant business disruption during the transition period and a similar disruption
could occur in the future. We expect to be dependent on such third-party arrangements for the foreseeable future.
We rely on third-party distribution channels to distribute a portion of our airline tickets .
We rely on third-party distribution channels, including those provided by or through global distribution systems, or GDSs (e.g., Amadeus,
Galileo, Sabre and Worldspan), conventional travel agents and online travel agents, or OTAs (e.g., Orbitz and Travelocity), to distribute a
portion of our airline tickets, and we expect in the future to rely on these channels to an increasing extent to collect ancillary revenues, such as
seat selection fees. These distribution channels are more expensive and at present have less functionality in respect of ancillary revenues than
those we operate ourselves, such as our call centers and our website. Certain of these distribution channels also effectively restrict the manner in
which we distribute our products generally. To remain competitive, we will need to manage successfully our distribution costs and rights, and
improve the functionality of third-party distribution channels, while maintaining an industry-competitive cost structure. Negotiations with key
GDSs and OTAs designed to manage our costs, increase our distribution flexibility and improve functionality could be contentious, could result
in diminished or less favorable distribution of our tickets, and may not provide the functionality we require to maximize ancillary revenues. Any
inability to manage our third-party distribution costs, rights and functionality at a competitive level or any material diminishment in the
distribution of our tickets could have a material adverse effect on our competitive position and our results of operations.
We rely on a single service provider for our fuel.
As of December 31, 2011, we purchased all of our aircraft fuel under a single fuel service contract with World Fuel Services Corporation.
A failure by this provider to fulfill its obligations could have a material adverse effect on our business, results of operations and financial
condition.
Our reputation and business could be adversely affected in the event of an emergency, accident or similar incident involving our
aircraft.
We are exposed to potential significant losses in the event that any of our aircraft is subject to an emergency, accident, terrorist incident or
other similar incident, and significant costs related to passenger claims, repairs or replacement of a damaged aircraft and its temporary or
permanent loss from service. There can be no assurance that we will not be affected by such events or that the amount of our insurance coverage
will be adequate in the event such circumstances arise and any such event could cause a substantial increase in our insurance premiums. Please
see “—
Increases in insurance costs or significant reductions in coverage could have a material adverse effect on our business, financial condition
and results of operations.” In addition, any future aircraft emergency, accident or similar incident, even if fully covered by insurance or even if it
does not involve our airline, may create a public perception that our airline or the equipment we fly is less safe or reliable than other
transportation alternatives, which could have an adverse impact on our reputation and could have a material adverse effect on our business,
results of operations and financial condition.
Negative publicity regarding our customer service could have a material adverse effect on our business.
In the past we have experienced a relatively high number of customer complaints related to, among other things, our customer service,
reservations and ticketing systems and baggage handling. In particular, we generally experience a higher volume of complaints when we make
changes to our unbundling policies, such as charging for baggage. In addition, in 2009,
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• the adoption of more restrictive locally-
imposed noise regulations or curfews.