Delta Airlines 2012 Annual Report Download - page 11

Delta TechOps, Delta Global Services, MLT Vacations and Delta Private Jets
We have several other businesses arising from our airline operations, including aircraft maintenance, repair and overhaul (“MRO”), staffing
services for third parties, vacation wholesale operations and our private jet operations. In 2012, the total revenue from these businesses was
approximately $1 billion.
Distribution and Expanded Product Offerings
Our tickets are sold through various distribution channels including telephone reservations, delta.com, global distribution systems and online
travel agencies. An increasing number of our tickets are sold through delta.com, which reduces our distribution costs and gives us closer contact with
our customers. We launched a new delta.com platform in November 2012, which we expect will result in additional purchases of tickets and services
through that channel.
We are transforming distribution from a commodity approach to a differentiated and merchandised approach. We expect that the merchandising
initiatives we are implementing, primarily through delta.com, will generate additional revenue opportunities for us and will improve the experience
of our customers. We provide our customers with opportunities to purchase what they value, such as first class upgrades, economy comfort seating,
WiFi access and SkyClub passes. We expect to benefit from increased traffic on delta.com through a combination of advertising revenue and sales of
third party merchandise and services such as car rentals, hotels and trip insurance.
Competition
The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency),
services, products, customer service and frequent flyer programs. The industry is going through a period of transformation through consolidation,
both domestically and internationally, and changes in international alliances. Consolidation in the airline industry and changes in international
alliances have altered and will continue to alter the competitive landscape in the industry by resulting in the formation of airlines and alliances with
increased financial resources, more extensive global networks and altered cost structures. In addition, other network carriers have also significantly
reduced their costs over the last several years including through restructuring and bankruptcy reorganization. American Airlines is nearing the end of
its bankruptcy restructuring, which is enabling it to reduce its costs. Our ability to compete effectively depends, in part, on our ability to maintain a
competitive cost structure.
Domestic
Our domestic operations are subject to competition from both traditional network and discount carriers, some of which may have lower costs than
we do and provide service at low fares to destinations served by us. In particular, we face significant competition at our domestic hub airports in
Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-LaGuardia, New York-JFK and Salt Lake City either directly at those
airports or at the hubs of other airlines that are located in close proximity to our hubs. We also face competition in smaller to medium-sized markets
from regional jet operators.
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• In addition to providing maintenance and engineering support for our fleet of over 700 aircraft, our MRO operation, known as Delta
TechOps, serves aviation and airline customers from around the world.
• Our staffing services business, Delta Global Services, provides staffing services, professional security, training services and aviation
solutions.
•
Our vacation wholesale business, MLT Vacations, provides vacation packages.
• Our private jet operations, Delta Private Jets, provides aircraft charters, aircraft management and programs allowing members to
purchase flight time by the hour.