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Table of Contents
our low-fare service; and our domestic marketing alliances, including with Continental Airlines, Inc. ("Continental") and Northwest Airlines, Inc.
("Northwest").
International Alliances
We have formed bilateral and multilateral marketing alliances with foreign airlines to improve our access to international markets. These arrangements
can include codesharing, frequent flyer benefits, shared or reciprocal access to passenger lounges, joint promotions and other marketing agreements.
Our international codesharing agreements enable us to market and sell seats to an expanded number of international destinations. Under international
codesharing arrangements, we and the foreign carriers publish our respective airline designator codes on a single flight operation, thereby allowing us and the
foreign carrier to offer joint service with one aircraft rather than operating separate services with two aircraft. These arrangements typically allow us to sell
seats on the foreign carrier's aircraft that are marketed under our "DL" designator code and permit the foreign airline to sell seats on our aircraft that are
marketed under the foreign carrier's two-letter designator code. We have international codeshare arrangements in effect with Aerolitoral, Aeromexico, Air
France (and certain of Air France's affiliated carriers operating flights beyond Paris), Air Jamaica, Alitalia, Avianca, China Airlines, China Southern, CSA
Czech Airlines, El Al Israel Airlines, flybe british european, Korean Air, Royal Air Maroc and South African Airways.
Delta, Aeromexico, Air France, Alitalia, Continental, CSA Czech Airlines, KLM Royal Dutch Airlines ("KLM"), Korean Air and Northwest are members
of the SkyTeam international airline alliance. One goal of SkyTeam is to link 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, we, our European SkyTeam partners and Korean Air received limited antitrust immunity from the U.S. Department of
Transportation ("DOT"). The grant of antitrust immunity enables us and our immunized partners to offer a more integrated route network, and develop
common sales, marketing and discount programs for customers. In September 2004, we filed an application, which is pending before the DOT, for six-way
transatlantic antitrust immunity in order to add Northwest and KLM to the antitrust immunity we have with Air France, Alitalia, and CSA Czech Airlines.
Delta Connection Program
The Delta Connection program is our regional carrier service, which feeds traffic to our route system through contracts with regional air carriers that
operate flights serving passengers primarily in small and medium-sized cities. The program enables us to increase the number of flights in certain locations, to
better match capacity with demand and to preserve our presence in smaller markets. Our Delta Connection network operates the largest number of regional
jets in the United States.
We have contractual arrangements with five regional carriers to operate regional jet and turboprop aircraft using our "DL" designator code. ASA and
Comair are our wholly-owned subsidiaries, which operate all of their flights under our code. We also have agreements with SkyWest Airlines, Inc.
("SkyWest"), Chautauqua Airlines, Inc. ("Chautauqua") and American Eagle Airlines, Inc. ("Eagle"), which operate some of their flights using our code. We
pay SkyWest and Chautauqua amounts, as defined in the applicable agreement, which are based on an annual determination of their respective cost of
operating those flights and other factors intended to approximate market rates for those services. We have recently entered into a comparable agreement with
Republic Airline, Inc. ("Republic Airline"), an affiliate of Chautauqua, under which Republic Airline is scheduled to begin operating some of their flights
under our code in July 2005. For additional information regarding our agreements with SkyWest and Chautauqua, see Note 8 of the Notes to the Consolidated
Financial Statements.
Our contract with Eagle, which is limited to certain flights operated to and from the Los Angeles International Airport, as well as a portion of our SkyWest
agreement, are structured as revenue proration agreements. These prorate arrangements establish a fixed dollar or percentage division of revenues for tickets
sold to passengers traveling on connecting flight itineraries. 2