Delta Airlines 2015 Annual Report Download - page 7

TableofContents
EnhancedCommercialAgreementswithForeign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.Ourcommercialagreementswitheachofthesecarriersseparatelyprovideforexpansionofreciprocalcodesharingandfrequentflyerprogram
participation,airportloungeaccessarrangements,improvedpassengerconnectionsandjointsalescooperation.
WeintendtofurtherexpandourrelationshipwithAeroméxicothroughajointventureonflightsbetweentheU.S.andMexicothatwillallowustocompete
moreeffectivelyontheseroutes.Wearecurrentlyseekingapprovalsfromgovernmentalauthoritiesforthisjointventure.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.WehavealsoannouncedourintentiontocommenceatenderofferforadditionalcapitalstockofGrupo
Aeroméxico(theparentcompanyofAeroméxico)thatwouldresultinusowningupto49%oftheoutstandingshares.
WehavealsoacquiredsharesofChinaEasternandenteredintoacommercialagreementwiththemtoexpandourrelationshipandbetterconnectthenetworks
ofthetwoairlines.TheexpandedcommercialagreementisdesignedtoallowthecarrierstocompetemoreeffectivelyonroutesbetweentheU.S.andChina,
providemoretraveloptionsforcustomersinbothcountriesandmakejointinvestmentsinthecustomerexperience.
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17%ofourpassengerrevenuein2015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:
• ExpressJetAirlines,Inc.andSkyWestAirlines,Inc.,bothsubsidiariesofSkyWest,Inc.;
• ShuttleAmericaCorporation("ShuttleAmerica"),asubsidiaryofRepublicAirwaysHoldings,Inc.;
• CompassAirlines,LLC(“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.
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.
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