Alaska Airlines and Horizon Air 2013 Annual Report Download - page 105

• 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 concentration of flights in the Pacific
Northwest and Alaska, we believe a large portion
of our operation is more susceptible to adverse
weather conditions. 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
The airline industry is highly competitive and
susceptible to price discounting and changes in
capacity, which could have a material adverse
effect on the Company. If we cannot
successfully compete in the marketplace, our
business, financial condition and operating
results will be materially adversely affected.
The U.S. airline industry is characterized by
substantial price competition. In recent years,
the market share held by low-cost carriers has
increased significantly and is expected to
continue to increase. Airlines also compete for
market share by increasing or decreasing their
capacity, including route systems and the
number of markets served. Several of our
competitors have increased their capacity in
markets we serve, particularly on the West
Coast, therefore increasing competition for those
destinations. This increased competition in both
domestic and international markets may have a
material adverse effect on the Company’s results
of operations, financial condition or liquidity.
We continue to strive toward aggressive cost-
reduction goals that are an important part of our
business strategy of offering the best value to
passengers through competitive fares while
achieving acceptable profit margins and return
on capital. If we are unable to reduce our costs
over the long-term and achieve sustained
targeted return on invested capital, we will likely
not be able to grow our business in the future or
weather industry downturns and therefore our
financial results may suffer.
The airline industry may undergo further
restructuring, consolidation, or the creation or
modification of alliances or joint ventures, any
of which could have a material adverse effect
on our business, financial condition and results
of operations.
We continue to face strong competition from
other carriers due to restructuring, consolidation,
and the creation and modification of alliances
and joint ventures. Since deregulation, both the
U.S. and international airline industries have
experienced consolidation through a number of
mergers and acquisitions. Carriers may improve
their competitive positions through airline
alliances, slot swaps/acquisitions, and/or joint
ventures. Certain airline joint ventures further
competition by allowing airlines to coordinate
routes, pool revenues and costs, and enjoy other
mutual benefits, achieving many of the benefits
of consolidation.
We depend on a few key markets to be
successful.
Our strategy is to focus on serving a few key
markets, including Seattle, Los Angeles,
Anchorage, Portland, Hawaii and San Diego. A
significant portion of our flights occur to and
from our Seattle hub. In 2013, passengers to
and from Seattle accounted for 61% 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
harmed by any circumstances causing a
reduction in demand for air transportation in our
key markets. An increase in competition in our
key markets could also cause us to reduce fares
or take other competitive measures that could
harm our business, financial condition and
results of operations.
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ŠForm 10-K