Delta Airlines 2013 Annual Report Download - page 12

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
TM
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. 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 and
gateway airports in Atlanta, Cincinnati, Detroit, Minneapolis-St. Paul, New York-LaGuardia, New York-JFK, Salt Lake City and Seattle either
directly at those airports or at the hubs of other airlines that are located in close proximity to our hubs and gateways. We also face competition in
smaller to medium-sized markets from regional jet operations of other carriers.
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 and transpacific joint ventures, 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.
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