Delta Airlines 2014 Annual Report Download - page 12

Regulatory Matters
The 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.
Fares and Rates
Airlines set ticket prices in all domestic and most international city pairs with minimal governmental regulation, and the industry is characterized by
significant price competition. Certain international fares and rates are subject to the jurisdiction of the DOT and the governments of the foreign
countries involved. Many of our tickets are sold by travel agents, and fares are subject to commissions, overrides and discounts paid to travel agents,
brokers and wholesalers.
Route Authority
Our flight operations are authorized by certificates of public convenience and necessity and also by exemptions and limited-entry frequency awards
issued by the DOT. The requisite approvals of other governments for international operations are controlled by bilateral agreements (and a multilateral
agreement in the case of the U.S. and the European Union) with, or permits or approvals issued by, foreign countries. Because international air
transportation is governed by bilateral or other agreements between the U.S. and the foreign country or countries involved, changes in U.S. or foreign
government aviation policies could result in the alteration or termination of such agreements, diminish the value of our international route authorities
or otherwise affect our international operations. Bilateral agreements between the U.S. and various foreign countries served by us are subject to
renegotiation from time to time. The U.S. government has negotiated “open skies” agreements with many countries, which allow unrestricted access
between the U.S. and the foreign markets. These agreements include separate agreements with the European Union and Japan.
Certain of our international route authorities are subject to periodic renewal requirements. We request extension of these authorities when and as
appropriate. While the DOT usually renews temporary authorities on routes where the authorized carrier is providing a reasonable level of service,
there is no assurance this practice will continue in general or with respect to a specific renewal. Dormant route authorities may not be renewed in some
cases, especially where another U.S. carrier indicates a willingness to provide service.
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