Delta Airlines 2006 Annual Report Download - page 7

See “RiskFactors Relating to Delta” and “Risk Factors Relating to the Airline Industry” in Item 1A and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Item 7 for additional discussion of trends and factors affecting us and our industry.
Airline Operations
Our route networkis centered around the hub system we operate at airports in Atlanta, Cincinnati, New York (John F. Kennedy International Airport
(“JFK”)) and Salt Lake City. Each of these hub operations includes Delta flights that gather and distribute traffic from markets in the geographic region
surrounding the hub to domestic and international cities and to other Delta hubs. Our hub system also provides passengers with access to our principal
international gateways in Atlanta and JFK.
As briefly discussed below, other key characteristics of our route network include our alliances with foreign airlines; the Delta Connection program; the
Delta Shuttle; and our domestic marketing alliances, including with Continental Airlines, Inc. (“Continental”) and Northwest Airlines, Inc. (“Northwest”).
International Alliances
We have formedbilateral and multilateral marketing alliances with foreign airlines to improve our access to international markets. These arrangements
can include codesharing, reciprocal frequent flyer program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport
gates and ticket counters, ticket office co-location and other marketing agreements. These alliances often present opportunities in other areas, such as airport
ground handling arrangements and aircraft maintenance insourcing.
Our international codesharingagreements enable us to market and sell seats to an expanded number of international destinations. Under international
codesharing arrangements, we and a foreign carrier each 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 a 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 Aeromexico, Air France, Air
Jamaica (currently expected to terminate on April 30, 2007), Alitalia, Avianca, China Airlines, China Southern, CSA Czech Airlines, El Al Israel Airlines,
KLM Royal Dutch Airlines, Korean Air and Royal Air Maroc (and some affiliated carriers operating in conjunction with these airlines).
In addition to our agreements with individual foreign airlines, we are a member of the SkyTeam international airline alliance. The other full members of
SkyTeam are Aeroflot, Aeromexico, Air France, Alitalia, Continental, CSA Czech Airlines, KLM Royal Dutch Airlines, Korean Air and Northwest. 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, Air France, Alitalia, CSA Czech Airlines and Korean Air received limited antitrust immunity from the U.S. Department of Transportation
(the “DOT”) that enables us and our immunized partners to offer a more integrated route network and develop common sales, marketing and discount
programs for customers.
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 we have in certain
locations, to better match capacity with demand and to preserve our presence in smaller markets. The Delta Connection program operates the largest number
of regional jets in the United States.
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