Delta Airlines 2014 Annual Report Download - page 11

We are transforming distribution to a merchandised approach by introducing well-defined and differentiated products available to our customers.
We will offer five products, which include premium amenities and services in Delta One
TM
, First Class and Delta Comfort+
TM
(formerly Economy
Comfort
TM
) while Main Cabin and Basic Economy options allow customers to match the level of service with their preferences. We expect that these
merchandising initiatives, implemented primarily through Delta’s digital channels, will allow customers to better understand our product offerings,
make it easier to buy the products they desire and increase customer satisfaction.
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, the rise of well-funded government
sponsored international carriers, changes in international alliances and the creation of immunized joint ventures have altered and will continue to alter
the competitive landscape in the industry, resulting in the formation of airlines and alliances with increased financial resources, more extensive global
networks and competitive cost structures.
Domestic
Our domestic operations are subject to competition from traditional network carriers, including American Airlines and United Airlines, national
point-to-
point carriers, including Alaska Airlines, JetBlue Airways and Southwest Airlines, and discount carriers, some of which may have lower costs
than we do and provide service at low fares to destinations served by us. Point-to-point, discount and ultra low-cost carriers, including Spirit Airlines
and Allegiant Air, place significant competitive pressure on network carriers in the domestic market. In particular, we face significant competition at
our domestic hub and gateway airports 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 foreign and domestic carriers. Competition is increasing from well-
funded carriers
in the Gulf region, including Emirates, Etihad Airways and Qatar Airways. These carriers have large numbers of international widebody aircraft on
order and are increasing service to the U.S. 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.
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 and others) and
the oneworld alliance (among American Airlines, British Airways, Qantas and others) have altered competition in international markets.
In addition, 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
antitrust immunity include a transatlantic alliance among United Airlines, Air Canada and Lufthansa German Airlines, a transpacific joint venture
between United Airlines and All Nippon Airways, a transatlantic joint venture among American Airlines, British Airways and Iberia and a transpacific
joint venture between American Airlines and Japan Air Lines.
6