Alaska Airlines and Horizon Air 2009 Annual Report Download - page 115

is regulated at the international, federal and
state levels. Privacy and information security
laws and regulations change, and compliance
with them may result in cost increases due to
necessary systems changes and the
development of new administrative processes.
The airline industry continues to face potential
security concerns and related costs.
The terrorist attacks of September 11, 2001 and
their aftermath negatively affected the airline
industry, including our company. Additional
terrorist attacks, the fear of such attacks or
other hostilities involving the U.S. could have a
further significant negative effect on the airline
industry, including us, and could:
• significantly reduce passenger traffic and
yields as a result of a potentially dramatic
drop in demand for air travel;
• significantly increase security and insurance
costs;
• make war risk or other insurance
unavailable or extremely expensive;
• increase fuel costs and the volatility of fuel
prices;
• increase costs from airport shutdowns, flight
cancellations and delays resulting from
security breaches and perceived safety
threats; and
• result in a grounding of commercial air
traffic by the FAA.
The occurrence of any of these events would
harm our business, financial condition and
results of operations.
Our operations are often affected by factors
beyond our control, including delays,
cancellations, and other conditions, which
could harm our financial condition and results
of operations.
Like other airlines, our operations often are
affected by delays, cancellations and other
conditions caused by factors largely beyond our
control.
A local dam in the Kent Valley near the Seattle-
Tacoma International Airport is partly
compromised. Many of the services necessary
for the operation of our airlines are located in the
valley, e.g., fuel supply, power, catering,
reservations call centers, etc. If the area
experiences heavy rains, flooding could occur
and our operations could be disrupted. The Army
Corps of Engineers estimates that the dam will
be repaired within three to five years. We have
contingency plans in place and are continuing to
monitor the situation.
Other conditions that might impact our
operations include:
• air traffic congestion at airports or other air
traffic control problems;
• adverse weather conditions;
• increased security measures or breaches in
security;
• international or domestic conflicts or
terrorist activity; and
• other changes in business conditions.
Due to our geographic area of operations, we
believe a large portion of our operation is more
susceptible to adverse weather conditions than
that of many of our competitors. A general
reduction in airline passenger traffic as a result
of any of the above-mentioned factors could
harm our business, financial condition and
results of operations.
STRATEGY
We depend on a few key markets to be
successful.
Our strategy is to focus on serving a few key
markets, including Seattle, Portland, Los Angeles
and Anchorage. A significant portion of our flights
occurs to and from our Seattle hub. In 2009,
passengers to and from Seattle accounted for
64% of our total passengers.
We believe that concentrating our service
offerings in this way allows us to maximize our
investment in personnel, aircraft, and ground
facilities, as well as to gain greater advantage
from sales and marketing efforts in those
regions. As a result, we remain highly dependent
on our key markets. Our business could be
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ŠForm 10-K