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SkyTeam Carriers Delta Air Lines, Korean Air Receive DOT Approval for Antitrust Immunity

27 June 2002

Delta Air Lines (NYSE:DAL) and its SkyTeam partner Korean Air today received the announcement from the U.S. Department of Transportation (DOT) granting antitrust immunity (ATI) for marketing agreements that would allow Delta and Korean Air to enhance their relationship.

In making the announcement, Leo F. Mullin, Delta’s chairman and CEO, said, "Global travelers and shippers will be the winners from this decision by the DOT. Delta already has ATI approval with its European SkyTeam partners - Air France, Alitalia, and CSA Czech Airlines. With this approval, the hub airports of Paris, Milan, Rome, Prague, Seoul and Atlanta will be linked by carriers with antitrust immunity. This will lead to new routes and more travel options for the customer."

The granting of antitrust immunity will permit Delta and Korean Air to join their European SkyTeam partners -- Air France, Alitalia, and CSA Czech Airlines -- to cooperate in the operation of their global route systems on a broad network-to-network basis, improving the quality and competitiveness of the services they offer to customers, while retaining their separate corporate and national identities.

"Approval of ATI for the Delta/Korean Air alliance will strengthen competition among global airline alliances and enhance international service in many U.S. cities, including major Delta hubs. It will also produce cost efficiencies and savings for the carriers through integration and coordination of their airline operations, which can be passed on to consumers in the form of improved service and better access to lower fares.

"The benefits of alliances continue to be two key factors – frequent flyer reciprocity and codesharing. As one of only two major alliances that offer these benefits, as well as ATI, SkyTeam will continue to enhance travel opportunities for customers," he added. 

Charles de Gaulle International Airport is the largest hub airport in Europe, Incheon International Airport is the least constrained hub in northeast Asia and Atlanta International Airport is the world’s largest single-carrier hub. 

Korean Air offers 51 daily departures from Incheon, the least constrained hub in Asia, to 59 worldwide destinations, while Delta offers 914 daily departures to 180 worldwide destinations from Atlanta, the world’s largest single-carrier hub. 

Delta presently codeshares on Korean Air flights from Atlanta, Anchorage, New York (JFK), Los Angeles, Washington (Dulles), Dallas/Fort Worth, Chicago, Honolulu and San Francisco to Seoul (Incheon), South Korea, and from Los Angeles to Narita, Japan. And, Delta is codesharing on Korean Air flights from Seoul to Osaka and Narita and within Korea, on flights to Busan.

With antitrust immunity, Delta and Korean Air, as well as the three European SkyTeam partners, will have the opportunity to discuss and agree on routes and schedules operated and coordinate marketing and sales programs, frequent flyer programs, pricing and revenue management initiatives, service standards and procedures, advertising and media programs, and cargo programs and operations resulting in improved services to customers. 

Antitrust immunity will encourage the five SkyTeam partners to manage their flight schedules and seat inventories in a manner that will maximize benefits to the overall network, improving customer choice for passengers departing from the United States to destinations in Asia and Europe. Similarly, passengers flying to the United States on Korean Air, Air France, Alitalia and CSA Czech Airlines will be able to link up with Delta’s extensive domestic system to reach destinations throughout the United States.

There is strong evidence that international airline alliances generate substantial benefits for consumers and enhance competition through improved air services and lower fares. With antitrust immunity, the five carriers will pursue a coordinated approach to schedules, routes and network planning to improve flight connections between Delta’s U.S. services and destinations beyond the hubs operated by Delta’s Asia and European partners in Seoul, Paris, Milan, Rome and Prague. This will permit these five carriers to expand their global codeshare operations providing travelers with more travel opportunities. 

The alliance is expected to result in cost efficiencies and savings, through the integration and coordination of services, which can be passed on to consumers in the form of improved service and better access to competitive prices.

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