Delta Airlines 2013 Annual Report Download - page 9

Enhanced commercial agreements with Latin American Carriers. We have separate strategic equity investments in Grupo Aeroméxico,
S.A.B. de C.V., the parent company of Aeroméxico, and GOL Linhas Aéreas Inteligentes, S.A, the parent company of GOL, and an exclusive
commercial relationship with each company's affiliated air carrier. We invested in GOL and Aeroméxico because they operate in Latin
America's two largest markets, Brazil and Mexico, respectively. The agreements provide for expansion of reciprocal codesharing and frequent
flyer program participation, airport lounge access arrangements, improved passenger connections and potential joint sales cooperation. In
addition to our commercial cooperation arrangements for passenger service with Aeroméxico, we and Aeroméxico have established a joint
venture relating to an airframe maintenance, repair and overhaul operation located in Queretaro, Mexico.
SkyTeam . In addition to our marketing alliance agreements with individual foreign airlines, we are a member of the SkyTeam global airline
alliance. The other members of SkyTeam are Aeroflot, Aerolineas Argentinas, Aeroméxico, Air Europa, Air France, Alitalia, China Airlines,
China Eastern, China Southern, CSA Czech Airlines, Kenya Airways, KLM, Korean Air, Middle East Airlines, Saudi Arabian Airlines, Tarom,
Vietnam Airlines and Xiamen Airlines. Garuda Indonesia also has announced its formal intent to join SkyTeam. Through alliance arrangements
with other SkyTeam carriers, Delta is able to link its network with the route networks of the other member airlines, providing opportunities for
increased connecting traffic while offering enhanced customer service through reciprocal codesharing and frequent flyer arrangements and
airport lounge access programs and coordinated cargo operations.
Codeshare Agreements . We also have international codeshare arrangements with the following international carriers, some of which are
carriers with which we also have more extensive relationships: Aeroflot, Aeroméxico, Air Europa, Air France, Alitalia, China Airlines, China
Eastern, China Southern, CSA Czech Airlines, KLM, Korean Air, Olympic Air, VRG Linhas Aéreas (operating as GOL), Vietnam Airlines,
Virgin Australia and WestJet (and affiliated carriers operating in conjunction with some of these airlines).
Domestic Alliances
We have a marketing alliance with Alaska Airlines, which includes reciprocal codesharing and frequent flyer and airport lounge access
arrangements. Our alliance agreement with Alaska Airlines allows us to expand our west coast presence. We also have reciprocal codesharing
and frequent flyer and airport lounge access arrangements with Hawaiian Airlines.
Regional Carriers
We have air service agreements with domestic regional air carriers that feed traffic to our route system by serving passengers primarily in
small-and medium-sized cities. These arrangements enable us to better match capacity with demand in these markets. Approximately 19%
of our
passenger revenue in 2013 was related to flying by these regional air carriers.
Through our regional carrier program, Delta Connection, we have contractual arrangements with regional carriers to operate regional jet and,
in certain cases, turbo-prop aircraft using our “DL” designator code. We have contractual arrangements with:
Our contractual agreements with regional carriers primarily are capacity purchase arrangements, under which we control the scheduling,
pricing, reservations, ticketing and seat inventories for the regional carriers' flights operating under our “DL” designator code, and we are
entitled to all ticket, cargo, mail and in-flight and ancillary revenues associated with these flights. We pay those airlines an amount, as defined in
the applicable agreement, which is based on a determination of their cost of operating those flights and other factors intended to approximate
market rates for those services. These capacity purchase agreements are long-term agreements, usually with initial terms of at least 10 years,
which grant us the option to extend the initial term. Certain of these agreements provide us the right to terminate the entire agreement, or in some
cases remove some of the aircraft from the scope of the agreement, for convenience at certain future dates.
SkyWest Airlines operates some flights for us under a revenue proration agreement. This proration agreement establishes a fixed dollar or
percentage division of revenues for tickets sold to passengers traveling on connecting flight itineraries.
3
•
ExpressJet Airlines, Inc. and SkyWest Airlines, Inc., both subsidiaries of SkyWest, Inc.;
•
Chautauqua Airlines, Inc. and Shuttle America Corporation, both subsidiaries of Republic Airways Holdings, Inc.;
• Compass Airlines, Inc. (“Compass”) and GoJet Airlines, LLC, both subsidiaries of Trans States Holdings, Inc. (“Trans States”);
and
•
Endeavor Air, Inc., which we acquired in May 2013 as a part of its confirmed plan of reorganization.