February 13, 2007
VIA EDGAR
Cecilia D. Blye
Chief, Office of Global Security Risk
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-5546
Re: Delta Air Lines, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2005
Filed March 27, 2006
File No. 1-05424
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1. We note from your website that you may have “partnerships” with other carriers or otherwise offer passenger flights to and from Cuba, Iran, North Korea, Sudan and Syria, countries identified as state sponsors of terrorism by the State Department and subject to sanctions administered by the Commerce Department’s Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control. Your 10-K does not include any information regarding contacts with these countries. Please describe your current, past and anticipated operations in and contacts with each of these countries, if any, including through affiliates, contract carriers, codesharing, alliance or other “partners” and other direct and indirect arrangements. Tell us whether and explain the extent to which the governments of these countries, or entities controlled by them, receive financing or act as intermediaries in connection with any such operations.
Delta does not operate any flights to or from Cuba, Iran, North Korea, Sudan or Syria (the “Five Countries”). Similarly, Delta has no operations in any of the Five Countries. Delta has no assets (including no jointly owned businesses) or employees in any of the Five Countries.
Delta is a signatory to “codeshare” or “interline” agreements with many foreign air carriers. Although we sometimes refer to such carriers as our “partners,” these codeshare and interline relationships are not legal partnerships; they are simply cooperative marketing relationships pursuant to which each carrier may sell tickets for air transportation on flights operated by the other carrier.[1]
Codeshare agreements are common in the air transportation industry and allow carriers to market and sell tickets on each other’s flights. The scope of these agreements is typically limited to permit codesharing only on certain routes. Delta has codeshare agreements, for example, with AeroMexico, Air France, Alitalia, and Korean Air. All of Delta’s codeshare relationships with foreign carriers have been reviewed and approved by the U.S. Department of Transportation. They fully comply with U.S. law. Delta does not market or sell tickets for travel to/from any of the Five Countries pursuant to any of these codeshare relationships.
Interline agreements are also common in the airline industry. They allow participating carriers to sell a single ticket for travel on multiple carriers, allowing the passenger’s baggage to be transferred seamlessly between connecting flights of each airline. Delta has interline agreements with more than 200 U.S. and foreign air carriers.
Although some foreign air carriers with which Delta has interline or codeshare relationships offer service to countries that are the subject of regulations promulgated by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), Delta policy prohibits the provision by Delta of services to, or engagement in transactions with, sanctioned countries, directly or through any codeshare or interline relationship, unless authorized under U.S. law.
U.S. law does not prohibit U.S. persons from traveling to and from Iran, North Korea, Sudan and Syria.[2] Moreover, current OFAC regulations generally do not restrict the exportation and importation of services to and from North Korea and Syria.[3] Although OFAC regulations generally restrict the exportation and importation of services to and from Iran and Sudan, the regulations contain an exemption for travel as well as for arrangement and facilitation of such travel to and from these countries.[4] Accordingly, U.S. air carriers are not prohibited from selling tickets for travel to and from those countries on flights operated by other carriers. Therefore, Delta employees or any one of the tens of thousands of independent travel agents authorized to issue tickets may sell interline tickets issued on Delta ticket stock for travel that includes flight segments operated by other carriers to or from Iran, North Korea, Sudan or Syria. When this occurs, Delta receives a small commission from the transaction. Therefore, Delta has lawfully received a de minimis amount of revenue from the sale of such tickets, as reported in response to Comment 3 below.
U.S. law prohibits persons subject to U.S. jurisdiction from traveling to and from Cuba, unless authorized by a specific license issued by OFAC or pursuant to the terms of a general license set forth in OFAC’s Cuban Assets Control Regulations (“CACR”).[5] Delta’s compliance policy therefore explicitly prohibits its employees or any independent travel agent issuing tickets on Delta ticket stock from selling any tickets or booking any flights to or from Cuba.
Notwithstanding this clear policy and the compliance procedures implemented by Delta,[6] however, independent travel agents or Delta employees occasionally exceed their authority and issue interline tickets on Delta ticket stock for travel to or from Cuba. The vast majority of such tickets are issued by foreign, independent travel agents who are not subject to Delta supervision or control. As a result of these rare violations of Delta policy, Delta received a de minimis amount of revenue (in the form of commissions) for flights operated by non-U.S. carriers to/from Cuba, as reported in response to Comment 3 below.
Delta’s wholly owned subsidiary, Comair, does not operate in the Five Countries. Delta has contract carrier agreements with six unaffiliated regional carriers but none of these relationships involve operations or business in the Five Countries. Delta does not own, manage or control the operations of any other carrier other than Delta. As a result, Delta cannot respond to the Staff’s inquiries on behalf of or with respect to any such carriers.
Delta does not provide loans or similar financing to any government of the Five Countries, or entities controlled by them. With respect to payments for services rendered, Delta has received a license from OFAC authorizing payments to Cuba for overflight services provided to Delta’s aircraft that enter airspace controlled by Cuba en route to destinations other than Cuba. Delta periodically makes such payments to the Cuban government and provides OFAC with an annual detailed accounting, in accordance with the terms of its license. In addition, through the U.S.-based airline clearinghouse that administers payments related to interline flights, carriers located in some of the Five Countries may receive interline settlement payments from Delta for flight segments operated by those carriers.
[1] Although our website and other marketing materials occasionally refer to the carriers with which we have interline or codeshare relationships as our “Worldwide Partners®”, these relationshps are not legal partnerships. The phrase “Worldwide Partners” is a registered trademark which Delta has used since October 1994 to market its global air transportation network through such cooperative marketing relationships. See U.S. Reg. No. 2022300. To reduce the possibility of confusion, we are reviewing our website to ensure that the phrase “Worldwide Partners” is appropriately identified as a registered trademark.
[2] OFAC’s Terrorism List Governments Sanctions Regulations do not prohibit travel to countries that have been designated as state sponsors of terrorism. 31 C.F.R. Part 596. In addition, OFAC’s country-specific sanctions regulations do not restrict travel to Iran, North Korea, Sudan and Syria. See id. Parts 560, 500, 538, and 542.
[3] See id.§ 500.586 (general license authorizing certain new transactions involving North Korea, after June 19, 2000) and § 542.206(d) (exemption for travel to/from Syria and transactions ordinarily incident to travel; also, the Syrian Sanctions Regulations do not otherwise prohibit exportation of services to all persons or entities in Syria).
[4] Id.§§ 538.211(d), 560.210(d).
[5] 31 C.F.R. Part 515.
[6] Delta’s OFAC compliance policy is discussed in response to Comment 4.
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1) Codeshare and interline agreements involving U.S.-person airlines and sanctioned destinations deemed to fall within the scope of the IEEPA travel exemption. This includes Delta selling tickets for air transportation on flights operated by another carrier involving sanctioned countries, including in the context of tickets issued on the U.S.-person airline's ticket stock and where the U.S.-person airline receives a commission from the transaction. Note that actually operating flights to sanctioned destinations is not considered to be within the travel exemption.
*See General Note on Correspondence of Publicly traded Companies with the SEC Concerning Sanctions (System Ed. Note)