Delta Airlines 2012 Annual Report Download - page 12

International
Our international operations are subject to competition from both domestic and foreign carriers. Through alliance and other marketing and
codesharing agreements with foreign carriers, U.S. carriers have increased their ability to sell international transportation, such as services to and
beyond traditional European and Asian gateway cities. Similarly, foreign carriers have obtained increased access to interior U.S. passenger traffic
beyond traditional U.S. gateway cities through these relationships. In particular, alliances formed by domestic and foreign carriers, including
SkyTeam, the Star Alliance (among United Airlines, Lufthansa German Airlines, Air Canada, All Nippon Airways and others) and the oneworld
alliance (among American Airlines, British Airways, Iberia, Qantas and others) have significantly increased competition in international markets.
Increased competition has also emerged from well-funded carriers in the Gulf region, including Emirates, Etihad and Qatar. These carriers have
large numbers of international widebody aircraft on order and are increasing service to the United States from their hubs in the Middle East. Several
of these carriers, along with carriers from China, India and Latin America, are government supported or funded, which has allowed them to grow
quickly, reinvest in their product and expand their global presence at the expense of U.S. airlines. In addition, the adoption of liberalized Open Skies
Aviation Agreements with an increasing number of countries around the world, including in particular the Open Skies Treaties that the U.S. has with
the Member States of the European Union, Japan and the Gulf states, could significantly increase competition among carriers serving those markets.
Several joint ventures among U.S. and foreign carriers, including our transatlantic joint venture with Air France-KLM and Alitalia and our
transpacific joint venture with Virgin Australia, have received grants of antitrust immunity allowing the participating carriers to coordinate schedules,
pricing, sales and inventory. Other joint ventures that have received anti-trust immunity include a transatlantic alliance among United, Air Canada
and Lufthansa, a transpacific joint venture among United and All Nippon Airways, a transatlantic joint venture among American, British Airways
and Iberia and a transpacific joint venture between American and Japan Air Lines.
Regulatory Matters
The Department of Transportation (“DOT”) and the Federal Aviation Administration (the “FAA”) exercise regulatory authority over air
transportation in the U.S. 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 authority to operate domestic and international air transportation (including the
carriage of passengers and cargo). Except for constraints imposed by regulations regarding “Essential Air Services,” which are applicable to certain
small communities, airlines may terminate service to a city without restriction.
The DOT has jurisdiction over certain economic and consumer protection matters, such as unfair or deceptive practices and methods of
competition, advertising, denied boarding compensation, baggage liability and disabled passenger transportation. The DOT also has authority to
review certain joint venture agreements between major carriers and engages in regulation of economic matters such as slot transactions. The FAA has
primary responsibility for matters relating to the safety of air carrier flight operations, including airline operating certificates, control of navigable air
space, flight personnel, aircraft certification and maintenance and other matters affecting air safety.
Authority to operate international routes and international codesharing arrangements is regulated by the DOT and by the governments of the
foreign countries involved. International certificate authorities are also subject to the approval of the U.S. President for conformance with national
defense and foreign policy objectives.
The Transportation Security Administration and the U.S. Customs and Border Protection, each a division of the Department of Homeland
Security, are responsible for certain civil aviation security matters, including passenger and baggage screening at U.S. airports and international
passenger prescreening prior to entry into or departure from the U.S.
Airlines are also subject to various other federal, state, local and foreign laws and regulations. For example, the U.S. Department of Justice has
jurisdiction over airline competition matters. The U.S. Postal Service has authority over certain aspects of the transportation of mail. Labor relations
in the airline industry, as discussed below, are generally governed by the Railway Labor Act. Environmental matters are regulated by various federal,
state, local and foreign governmental entities. Privacy of passenger and employee data is regulated by domestic and foreign laws and regulations.
7