Delta Airlines 2014 Annual Report Download - page 8

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 in GOL Linhas Aéreas Inteligentes, S.A, the parent company of VRG Linhas Aéreas (operating as
GOL), and an exclusive commercial relationship with each air carrier. We invested in Aeroméxico and GOL because they operate in Latin America's
two largest markets, Mexico and Brazil, respectively. The agreements provide for expansion of reciprocal codesharing and frequent flyer program
participation, airport lounge access arrangements, improved passenger connections and 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, Aerolíneas Argentinas, Aeroméxico, Air Europa, Air France, Alitalia, China Airlines, China
Eastern, China Southern, CSA Czech Airlines, Garuda Indonesia, Kenya Airways, KLM, Korean Air, Middle East Airlines, Saudi Arabian Airlines,
Tarom, Vietnam Airlines and Xiamen Airlines. 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, airport lounge access programs and coordinated cargo operations.
Domestic Alliances
We have reciprocal codesharing and frequent flyer program participation and airport lounge access arrangements with both Alaska Airlines and
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 18% of our passenger
revenue in 2014 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 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. We are entitled to all ticket,
cargo, mail, 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.;
•
Shuttle America Corporation, a subsidiary 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 is a wholly-
owned subsidiary of ours.