Delta Airlines 2005 Annual Report Download - page 14

Table of Contents
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, 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 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 record a liability for the estimated incremental cost of flight awards which are earned under our SkyMiles frequent flyer
program and expected to be redeemed for travel on Delta or other airline partners. Our incremental costs include (1) our system
average cost per passenger for fuel, food and other direct passenger costs for awards to be redeemed on Delta and (2) contractual costs
for awards to be redeemed on partner airlines. The liability is recorded in accounts payable, deferred credits and other accrued
liabilities on our Consolidated Balance Sheets. We periodically record adjustments to this liability in other operating expenses on our
Consolidated Statements of Operations based on awards earned, awards redeemed, changes in our estimated incremental costs and
changes to the SkyMiles program.
At December 31, 2005, 2004 and 2003, we had recorded a liability of $291 million, $211 million and $229 million, respectively,
for expected redemptions of 7 million, 6 million and 10 million travel awards, respectively.
Frequent flyer program participants redeemed 3.3 million, 2.9 million, and 2.8 million round-trip award tickets on Delta or any of
our partner airlines in 2005, 2004 and 2003, respectively. Approximately 9%, 8% and 9% of our total revenue passenger miles were
flown by participants using award tickets in 2005, 2004 and 2003, respectively. We believe that the relatively low percentage of
passenger miles flown by SkyMile members traveling on program awards and the restrictions applied to travel awards minimize the
displacement of revenue passengers.
Civil Reserve Air Fleet Program
We participate in the Civil Reserve Air Fleet ("CRAF") program, which permits the U.S. military to use the aircraft and crew
resources of participating U.S. airlines during airlift emergencies, national emergencies or times of war. We have agreed to make
available under the CRAF program, during the period 9