Delta Airlines 2002 Annual Report Download - page 8

Delta has contractual arrangements with six regional carriers to
operate regional jet and turboprop aircraft using Delta's "DL" code. ASA and
Comair are wholly owned subsidiaries of Delta which operate all of their flights
under Delta's code. Delta has agreements with Atlantic Coast Airlines ("ACA"),
SkyWest Airlines ("SkyWest"), Chautauqua Airlines ("Chautauqua") and American
Eagle ("Eagle"), which operate some of their flights using Delta's code. For
information regarding Delta's agreements with ACA, SkyWest and Chautauqua, see
Note 9 of the Notes to the Consolidated Financial Statements on pages 48-50 of
Delta's 2002 Annual Report to Shareowners, which is incorporated by reference.
Delta's contract with Eagle, which is limited to certain flights
operated to and from the Los Angeles International Airport, is structured as a
revenue proration agreement. The Delta-Eagle prorate arrangement establishes a
fixed dollar or percentage division of revenues for tickets sold to passengers
traveling on connecting flight itineraries.
Delta Shuttle. The Delta Shuttle is the Company's high-frequency
service targeted to Northeast business travelers. It provides nonstop, hourly
service between New York - La Guardia Airport (Marine Air Terminal) and both
Boston - Logan International Airport and Washington, D.C. - Ronald Reagan
National Airport.
Song. On January 29, 2003, Delta announced a new low-fare operation,
Song, that will primarily offer flights between cities in the Northeast United
States and Florida leisure destinations. Delta plans to operate the initial Song
flight in April 2003 and increase operations by October 2003 to 144 daily
flights using a fleet of 36 Boeing 757 aircraft. Song is designed to assist
Delta in competing more effectively with low-fare airlines in leisure markets
through a combination of larger aircraft, high frequency flights, advanced
in-flight entertainment technology and innovative product offerings. Song will
replace Delta Express, the Company's existing low-fare, leisure-oriented
service.
Delta-Continental-Northwest Marketing Alliance. On August 22, 2002,
Delta entered into a marketing alliance with Continental Airlines and Northwest
Airlines which includes mutual codesharing, reciprocal frequent flyer and
airport lounge access arrangements. Delta's marketing relationship with
Continental and Northwest is designed to permit the carriers to retain their
separate identities and route networks while increasing the number of domestic
and international connecting passengers using the three carriers' route
networks. The implementation of the marketing alliance is subject to a number of
conditions, including approvals which have been obtained from the Delta and
Northwest pilot groups; review by the U.S. Department of Justice ("DOJ") and the
DOT; and the consent of certain of the international airline partners of the
three airlines. The DOJ reviewed the alliance arrangement pursuant to its
authority to enforce the antitrust laws and determined not to challenge the
alliance in January 2003 following the carriers' decision to accept certain DOJ
conditions. The DOT completed its initial review of the marketing arrangements
in January 2003 and proposed six conditions for the alliance. On February 28,
2003, after consultations with the DOT, the carriers submitted a proposal in
which they accepted three of the DOT's conditions and proposed alternative
language for three other conditions. On March 3, 2003, the DOT issued a notice
stating that it would consider the carriers' proposed language and reach a
decision within 30 days on whether the alternate conditions are satisfactory.
The current expectation is that the carriers should be in a position to
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