Delta Airlines 2005 Annual Report Download - page 8

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Table of Contents
connecting traffic while offering enhanced customer service through mutual codesharing arrangements, reciprocal frequent flyer and
lounge programs and coordinated cargo operations. In 2002, we, Air France, Alitalia, CSA Czech Airlines 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 December 2005, the DOT denied our application for six-way transatlantic antitrust immunity 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 seven regional carriers to operate regional jet and, in certain cases, turbo-prop aircraft
using our "DL" designator code. Our wholly-owned subsidiary, Comair, operates all of its flights under our code. Atlantic Southeast
Airlines, Inc. ("ASA"), which we sold to SkyWest Holdings, Inc. ("SkyWest") in September 2005, continues to operate all of its
flights under our code. In addition, we have agreements with the following regional carriers that operate some of their flights using our
code: SkyWest Airlines, Inc. ("SkyWest Airlines"), a subsidiary of SkyWest; Chautauqua Airlines, Inc. ("Chautauqua"), a subsidiary
of Republic Airways Holdings, Inc. ("Republic Holdings"); Shuttle America Corporation ("Shuttle America"), a subsidiary of
Republic Holdings; Freedom Airlines, Inc. ("Freedom"), a subsidiary of Mesa Air Group, Inc.; and American Eagle Airlines, Inc.
("Eagle").
We generally pay ASA, SkyWest Airlines, Chautauqua, Shuttle America and Freedom amounts, as defined in their respective
contract carrier agreements, which are based on a determination of their respective cost of operating those flights and other factors
intended to approximate market rates for those services. Our arrangement with Eagle, which is limited to certain flights operated to
and from the Los Angeles International Airport, as well as a portion of the flights operated using our code by SkyWest Airlines, 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. For additional information regarding our contract carrier
agreements, see Note 10 of the Notes to the Consolidated Financial Statements.
Delta Shuttle
The Delta Shuttle is our high frequency service targeted to Northeast business travelers. It provides nonstop, hourly service on
business days between New York — LaGuardia Airport ("LaGuardia") and both Boston — Logan International Airport ("Logan") and
Washington, D.C. — Ronald Reagan National Airport ("National").
Domestic Alliances
We have entered into marketing alliances with (1) Continental and Northwest (including regional carriers affiliated with each) and
(2) Alaska Airlines and Horizon Air Industries, both of which include mutual codesharing and reciprocal frequent flyer and airport
lounge access arrangements. These marketing relationships are 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 carriers' route networks.
Currently, Delta, Continental and Northwest are allowed to codeshare on a combined 5,200 flights.
Regulatory Matters
The DOT and the Federal Aviation Administration ("FAA") exercise regulatory authority over air transportation in the United
States. The DOT has authority to issue certificates of public convenience and necessity required for airlines to provide domestic air
transportation. An air carrier that the DOT finds "fit" to operate is given unrestricted authority to operate domestic air transportation
(including the carriage of 3