Spirit Airlines 2014 Annual Report Download - page 14

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Restrictions on or increased taxes applicable to charges for ancillary products and services paid by airline passengers
and burdensome consumer protection regulations or laws could harm our business, results of operations and financial
condition.
During 2014, 2013 and 2012, we generated non-ticket revenues of $786.6 million, $668.4 million and $535.6 million,
respectively. Our non-ticket revenues are generated from charges for, among other things, baggage, bookings through certain of
our distribution channels, advance seat selection, itinerary changes and loyalty programs. The DOT has rules governing many
facets of the airline-consumer relationship, including, for instance, price advertising, tarmac delays, bumping of passengers
from flights, ticket refunds and the carriage of disabled passengers. If we are not able to remain in compliance with these rules,
the DOT may subject us to fines or other enforcement action, including requirements to modify our passenger reservations
system, which could have a material adverse effect on our business. The U.S. Congress and Federal administrative
agencies have investigated the increasingly common airline industry practice of unbundling the pricing of certain products and
services. If new taxes are imposed on non-ticket revenues, or if other laws or regulations are adopted that make unbundling of
airline products and services impermissible, or more cumbersome or expensive, our business, results of operations and financial
condition could be harmed. Congressional and other government scrutiny may also change industry practice or public
willingness to pay for ancillary services. See also “—We are subject to extensive regulation by the Federal Aviation
Administration, the Department of Transportation and other U.S. and foreign governmental agencies, compliance with which
could cause us to incur increased costs and adversely affect our business and financial results.”
The airline industry is particularly sensitive to changes in economic conditions. Continued adverse economic conditions
or a reoccurrence of such conditions would negatively impact our business, results of operations and financial condition.
Our business and the airline industry in general are affected by many changing economic conditions beyond our control,
including, among others:
• changes and volatility in general economic conditions, including the severity and duration of any downturn in the U.S.
or global economy and financial markets;
• changes in consumer preferences, perceptions, spending patterns or demographic trends, including any increased
preference for higher-fare carriers offering higher amenity levels, and reduced preferences for low-fare carriers
offering more basic transportation, during better economic times;
• higher levels of unemployment and varying levels of disposable or discretionary income;
• depressed housing and stock market prices; and
• lower levels of actual or perceived consumer confidence.
These factors can adversely affect, and from time to time have adversely affected, our results of operations, our ability to
obtain financing on acceptable terms and our liquidity. Unfavorable general economic conditions, such as higher
unemployment rates, a constrained credit market, housing-related pressures and increased focus on reducing business operating
costs can reduce spending for price-sensitive leisure and business travel. For many travelers, in particular the price-sensitive
travelers we serve, air transportation is a discretionary purchase that they may reduce or eliminate from their spending in
difficult economic times. The overall decrease in demand for air transportation in the United States in 2008 and 2009 resulting
from record high fuel prices and the economic recession required us to take significant steps to reduce our capacity, which
reduced our revenues. Unfavorable economic conditions could also affect our ability to raise prices to counteract increased fuel,
labor or other costs, resulting in a material adverse effect on our business, results of operations and financial condition.
The airline industry faces ongoing security concerns and related cost burdens, furthered by threatened or actual
terrorist attacks or other hostilities that could significantly harm our industry and our business.
The terrorist attacks of September 11, 2001 and their aftermath negatively affected the airline industry. The primary
effects experienced by the airline industry included:
• substantial loss of revenue and flight disruption costs caused by the grounding of all commercial air traffic in or
headed to the United States by the FAA for three days after the terrorist attacks;
• increased security and insurance costs;
• increased concerns about future terrorist attacks;
• airport shutdowns and flight cancellations and delays due to security breaches and perceived safety threats; and