Delta Airlines 2003 Annual Report Download - page 12

Table of Contents
Our ability to compete effectively with low-cost carriers and other airlines depends, in part, on our ability to achieve operating costs per available seat mile
("unit costs") that are competitive with those carriers. Our unit costs are significantly higher than those of Southwest, AirTran and JetBlue and have gone from
being among the lowest of the hub-and-spoke carriers to among the highest for the full year 2003. If we are not able to realign our cost structure to compete
with that of other carriers, or if fare reductions are not offset by higher yields, our business, financial condition and operating results may be materially
adversely affected.
International marketing alliances formed by domestic and foreign carriers, including the Star Alliance (among United Airlines, Inc. ("United"), Lufthansa
German Airlines and others) and the oneworld alliance (among AMR Corporation ("American"), British Airways and others), have significantly increased
competition in international markets. Through marketing and codesharing arrangements with U.S. carriers, foreign carriers have obtained access to interior
U.S. passenger traffic. Similarly, U.S. carriers have increased their ability to sell international transportation such as transatlantic services to and beyond
European cities through alliances with international carriers.
We regularly monitor competitive developments in the airline industry and evaluate our strategic alternatives. These strategic alternatives include, among
other things, internal growth, codesharing arrangements, marketing alliances, joint ventures, and mergers and acquisitions. Our evaluations involve internal
analysis and, where appropriate, discussions with third parties.
Airport Access
Operations at three major U.S. airports and certain foreign airports served by us are regulated by governmental entities through "slot" allocations. Each slot
represents the authorization to land at, or take off from, the particular airport during a specified time period.
In the United States, the FAA currently regulates slot allocations at JFK and LaGuardia in New York and National in Washington, D.C. Our operations at
those three airports generally require slot allocations. Under legislation enacted by Congress, slot rules will be phased out at JFK and LaGuardia by 2007.
We currently have sufficient slot authorizations to operate our existing flights, and have generally been able to obtain slots to expand our operations and to
change our schedules. There is no assurance, however, that we will be able to obtain slots for these purposes in the future because, among other reasons, slot
allocations are subject to changes in governmental policies.
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