Spirit Airlines 2014 Annual Report Download - page 15

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• significantly reduced passenger traffic and yields due to the subsequent dramatic drop in demand for air travel.
Since September 11, 2001, the Department of Homeland Security and the Transportation Security Administration, or
TSA, have implemented numerous security measures that restrict airline operations and increase costs, and are likely to
implement additional measures in the future. For example, following the widely publicized attempt of an alleged terrorist to
detonate plastic explosives hidden underneath his clothes on a Northwest Airlines flight on Christmas Day in 2009, passengers
became subject to enhanced random screening, which included pat-downs, explosive detection testing and body scans.
Enhanced passenger screening, increased regulation governing carry-on baggage and other similar restrictions on passenger
travel may further increase passenger inconvenience and reduce the demand for air travel. In addition, increased or enhanced
security measures have tended to result in higher governmental fees imposed on airlines, resulting in higher operating costs for
airlines, which we may not be able to pass on to consumers in the form of higher prices. Any future terrorist attacks or
attempted attacks, even if not made directly on the airline industry, or the fear of such attacks or other hostilities (including
elevated national threat warnings or selective cancellation or redirection of flights due to terror threats) would likely have a
material adverse effect on our business, results of operations and financial condition and on the airline industry in general.
Airlines are often affected by factors beyond their control including: air traffic congestion at airports; air traffic control
inefficiencies; adverse weather conditions, such as hurricanes or blizzards; increased security measures; new travel
related taxes or the outbreak of disease, any of which could harm our business, operating results and financial
condition.
Like other airlines, our business is affected by factors beyond our control, including air traffic congestion at airports, air
traffic control inefficiencies, adverse weather conditions, increased security measures, new travel related taxes and the outbreak
of disease. Factors that cause flight delays frustrate passengers and increase costs, which in turn could adversely affect
profitability. The federal government singularly controls all U.S. airspace, and airlines are completely dependent on the FAA to
operate that airspace in a safe, efficient and affordable manner. The air traffic control system, which is operated by the FAA,
faces challenges in managing the growing demand for U.S. air travel. U.S. and foreign air-traffic controllers often rely on
outdated technologies that routinely overwhelm the system and compel airlines to fly inefficient, indirect routes resulting in
delays. Adverse weather conditions and natural disasters, such as hurricanes affecting southern Florida and the Caribbean as
well as other areas of the eastern United States (such as Hurricane Sandy in October 2012), winter snowstorms or the January
2010 earthquakes in Port-au-Prince, Haiti, can cause flight cancellations or significant delays. Cancellations or delays due to
adverse weather conditions or natural disasters, air traffic control problems or inefficiencies, breaches in security or other
factors could harm our business, results of operations and financial condition. Similarly, outbreaks of pandemic or contagious
diseases, such as ebola, measles, avian flu, severe acute respiratory syndrome (SARS) and H1N1 (swine) flu, could result in
significant decreases in passenger traffic and the imposition of government restrictions in service and could have a material
adverse impact on the airline industry. Increased travel taxes, such as those provided in the Travel Promotion Act, enacted
March 10, 2010, which charges visitors from certain countries a $10 fee every two years to travel into the United States to
subsidize certain travel promotion efforts, could also result in decreases in passenger traffic. Any general reduction in airline
passenger traffic could have a material adverse effect on our business, results of operations and financial condition.
Restrictions on or litigation regarding third-party membership discount programs could harm our business, operating
results and financial condition.
We generate a relatively small but growing portion of our revenue from order referral fees, revenue share and other fees
paid to us by third-party merchants for customer click-throughs, distribution of third-party promotional materials and referrals
arising from products and services of the third-party merchants that we offer to our customers on our website. Some of these
third-party referral-based offers are for memberships in discount programs or similar promotions made to customers who have
purchased products from us, and for which we receive a payment from the third-party merchants for every customer that
accepts the promotion. Certain of these third-party membership discount programs have been the subject of consumer
complaints, litigation and regulatory actions alleging that the enrollment and billing practices involved in the programs violate
various consumer protection laws or are otherwise deceptive. Any private or governmental claim or action that may be brought
against us in the future relating to these third-party membership programs could result in our being obligated to pay damages or
incurring legal fees in defending claims. These damages and fees could be disproportionate to the revenues we generate
through these relationships. In addition, customer dissatisfaction or a significant reduction in or termination of the third-party
membership discount offers on our website as a result of these claims could have a negative impact on our brand, and have a
material adverse effect on our business, results of operations and financial condition.
We face competition from air travel substitutes.
In addition to airline competition from traditional network airlines, other low-cost airlines and regional airlines, we also
face competition from air travel substitutes. On our domestic routes, we face competition from some other transportation