Delta Airlines 2002 Annual Report Download - page 7

Airline Operations
An important characteristic of Delta's route network is its four hub
airports in Atlanta, Cincinnati, Dallas/Ft. Worth and Salt Lake City. Each of
these hub operations includes Delta flights that gather and distribute traffic
from markets in the geographic region surrounding the hub to other major cities
and to other Delta hubs. Delta's hub and spoke system also provides passengers
with access to Delta's principal international gateways in Atlanta and New York
- John F. Kennedy International Airport ("JFK"). As briefly discussed below,
other key characteristics of Delta's route network include its alliances with
foreign airlines; the Delta Connection Program; the Delta Shuttle; Song(TM),
Delta's new low-fare service which will begin operations in April 2003; and
Delta's proposed marketing alliance with Continental Airlines and Northwest
Airlines.
International Alliances. Delta has formed bilateral and multilateral
marketing alliances with foreign airlines to improve Delta's access to
international markets. These arrangements can include codesharing, frequent
flyer benefits, shared or reciprocal access to passenger lounges, joint
advertising and other marketing agreements.
Delta's international codesharing agreements enable Delta to market and
sell seats to an expanded number of international destinations. Under
codesharing arrangements, Delta and the foreign carriers publish their
respective airline designator codes on a single flight operation, thereby
allowing Delta and the foreign carrier to offer joint service with one aircraft
rather than operating separate services with two aircraft. These arrangements
typically allow Delta to sell seats on the foreign carrier's aircraft that are
marketed under Delta's "DL" designator code and permit the foreign airline to
sell seats on Delta's aircraft that are marketed under the foreign carrier's
two-letter designator code. As of March 1, 2003, Delta has codeshare
arrangements in effect with Aerolitoral, Aeromexico, Air France (and certain of
Air France's affiliated carriers operating flights beyond Paris), Air Jamaica,
Alitalia, British European, China Southern, CSA Czech Airlines, El Al Israel
Airlines, Korean Air, Royal Air Maroc and South African Airways.
Delta, Aeromexico, Air France, Alitalia, CSA Czech Airlines and Korean
Air are members of the SkyTeam international airline alliance. SkyTeam links the
route networks of the member airlines, providing opportunities for increased
connecting traffic while offering enhanced customer service through mutual
codesharing arrangements, reciprocal frequent flyer and lounge programs and
coordinated cargo operations. In 2002, Delta, its European SkyTeam partners and
Korean Air received antitrust immunity from the U.S. Department of
Transportation ("DOT"). The grant of antitrust immunity enables Delta and its
immunized partners to offer a more integrated route network, and develop common
sales, marketing and discount programs for customers.
Delta Connection Program. The Delta Connection program is Delta's
regional carrier service, which feeds traffic to Delta's route system through
contracts with regional air carriers that operate flights serving passengers in
small and medium-sized cities. It enables Delta to increase the number of
flights in certain locations, to better match capacity with demand and to
preserve its presence in smaller markets.
4