Delta Airlines 2004 Annual Report Download - page 12

Table of Contents
had sufficient scheduling flexibility to accommodate local noise restrictions in the past, our operations could be adversely impacted if locally-imposed
regulations become more restrictive or widespread.
On December 1, 2003, the FAA published a Notice of Proposed Rulemaking ("NPRM") to adopt the International Civil Aviation Organization's ("ICAO")
Chapter 4 noise standard, which is known as the Stage 4 standard in the United States. This standard would require that all new commercial jet aircraft
designs certified on or after January 1, 2006 be at least ten decibels quieter than the existing Stage 3 noise standard requires. This new standard would not
apply to existing aircraft or to the continued production of aircraft types already certified. Comments on the NPRM were filed by various parties on March 1,
2004. All new aircraft that we have on order will meet the proposed Stage 4 standard. Accordingly, the proposed rule is not expected to have any significant
impact on us, and we and the U.S. airline industry generally supported the adoption of the NPRM. The FAA has not yet taken final action.
The United States Environmental Protection Agency (the "EPA") is authorized to regulate aircraft emissions. Our aircraft comply with the applicable EPA
standards. The EPA has issued a notice of proposed rulemaking to adopt the emissions control standards for aircraft engines previously adopted by the ICAO.
These standards would apply to newly designed engines certified after December 31, 2003, and would align the U.S. aircraft engine emission standards with
existing international standards. The rule, as proposed, is not expected to have a material impact on us.
In December 2004, Miami-Dade County filed a lawsuit in Florida Circuit Court against us, seeking injunctive relief and alleging responsibility for past
and future environmental cleanup costs and civil penalties for environmental conditions at Miami International Airport. This lawsuit is related to several other
actions filed by the County to recover environmental remediation costs incurred at the airport. We are vigorously defending this lawsuit. An adverse decision
in this case could result in substantial damages against us. Although the ultimate outcome of this matter cannot be predicted with certainty, management
believes that the resolution of this matter will not have a material adverse effect on our Consolidated Financial Statements.
We have been identified by the EPA as a potentially responsible party (a "PRP") with respect to certain Superfund Sites, and have entered into consent
decrees regarding some of these sites. Our alleged disposal volume at each of these sites is small when compared to the total contributions of all PRPs at each
site. We are aware of soil and/or ground water contamination present on our current or former leaseholds at several domestic airports. To address this
contamination, we have a program in place to investigate and, if appropriate, remediate these sites. Although the ultimate outcome of these matters cannot be
predicted with certainty, management believes that the resolution of these matters will not have a material adverse effect on our Consolidated Financial
Statements.
Frequent Flyer Program
We have a frequent flyer program, the SkyMiles® program, offering incentives to increase travel on Delta. This program allows participants to earn
mileage for travel awards by flying on Delta, Delta Connection carriers and participating airlines. Mileage credit may also be earned by using certain services
offered by program partners such as credit card companies, hotels, car rental agencies, telecommunication services and internet services. In addition, we have
programs under which individuals and companies may purchase mileage credits. We reserve the right to terminate the program with six months advance
notice, and to change the program's terms and conditions at any time without notice.
Mileage credits can be redeemed for free or upgraded air travel on Delta and participating airline partners, for membership in our Crown Room Club and
for other program partner awards. Travel awards are subject to certain transfer restrictions and capacity-controlled seating. In some cases, blackout dates may
apply. Miles earned prior to May 1, 1995 do not expire so long as we have a frequent flyer program. Miles earned or purchased on or after May 1, 1995 will
not expire as long as, at least once every three years, the participant (1) takes a qualifying flight on Delta or a Delta Connection carrier; (2) earns miles
through one of our program partners; or (3) redeems miles for any program award.
We account for our frequent flyer program obligations by recording a liability for the estimated incremental cost of travel awards we expect to be
redeemed. The estimated incremental cost associated with a travel award does not include any contribution to overhead or profit. Such incremental cost is
based on our system average 8