Delta Airlines 2011 Annual Report Download - page 12

Domestic
Our domestic operations are subject to competition from both traditional network and discount carriers, some of which may have lower costs than we do
and provide service at low fares to destinations served by us. In particular, we face significant competition at our domestic hub airports in Atlanta, Cincinnati,
Detroit, Memphis, Minneapolis-St. Paul, New York-JFK and Salt Lake City either directly at those airports or at the hubs of other airlines that are located in
close proximity to our hubs. We also face competition in smaller to medium-sized markets from regional jet operators.
International
Our international operations are subject to competition from both domestic and foreign carriers. 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 Air Lines, Continental Airlines, Lufthansa German Airlines, Air Canada and others) and the oneworld alliance (among American Airlines, British
Airways, Qantas and others) have significantly increased competition in international markets. The adoption of liberalized Open Skies Aviation Agreements
with an increasing number of countries around the world, including in particular the Open Skies Treaties that the U.S. has with the Member States of the
European Union and Japan, could significantly increase competition among carriers serving those markets.
Several joint ventures among U.S. and foreign carriers, including our transatlantic joint venture with Air France-KLM and Alitalia, have received grants
of antitrust immunity allowing the participating carriers to coordinate schedules, pricing, sales and inventory. Other joint ventures that have received anti-trust
immunity include a transatlantic alliance among United, Continental, Air Canada and Lufthansa, a transpacific joint venture among United, Continental and
All Nippon Airways, a transatlantic joint venture among American, British Airways and Iberia, and a transpacific joint venture between American and Japan
Air Lines.
Regulatory Matters
The Department of Transportation (“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.
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