Alaska Airlines and Horizon Air 2010 Annual Report Download - page 128

such coverage may not be adequate to fully
cover all claims and we may be forced to bear
substantial losses from an accident. Substantial
claims resulting from an accident in excess of
our related insurance coverage would harm our
business and financial results. Moreover, any
aircraft accident or incident, even if fully insured
and even if it does not involve one of our
airlines, could cause a public perception that our
airlines or the equipment they fly is less safe or
reliable than other transportation alternatives,
which would harm our business.
Changes in government regulation imposing
additional requirements and restrictions on our
operations or on the airports at which we
operate could increase our operating costs and
result in service delays and disruptions.
Airlines are subject to extensive regulatory and
legal requirements, both domestically and
internationally, that involve significant
compliance costs. In the last several years,
Congress has passed laws, and the U.S. DOT,
the TSA and the FAA have issued regulations
that have required significant expenditures
relating to the maintenance and operation of
airlines. Similarly, many aspects of an airline’s
operations are subject to increasingly stringent
federal, state and local laws protecting the
environment.
Because of significantly higher security and other
costs incurred by airports since September 11,
2001, many airports have increased their rates
and charges to air carriers. Additional laws,
regulations, taxes, and airport rates and charges
have been proposed from time to time that could
significantly increase the cost of airline
operations or reduce the demand for air travel.
Although lawmakers may impose these
additional fees and view them as “pass-through”
costs, we believe that a higher total ticket price
will influence consumer purchase and travel
decisions and may result in an overall decline in
passenger traffic, which would harm our
business.
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.
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.
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