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Virgin America gets tentative approval to launch U.S. service
By Ben Mutzabaugh, USA TODAY
Virgin America was tentatively cleared to fly today by the Department of Transportation, a move that paves the way for the start-up carrier to begin service possibly as soon as this spring.
The DOT's approval may mean the end of Virgin America's two-year battle to begin service in the U.S. The airline was founded in 2004 and had initially hoped to begin flying in mid-2005.
TODAY IN THE SKY: Read the latest in airline news
From its inception, Virgin America — affiliated with British tycoon Richard Branson's Virgin Group — ran into opposition from U.S. rivals and pilots union groups who contended that the start-up carrier did not comply with federal rules restricting foreign ownership.
Federal laws that date back to the 1920s and 30s maintain that domestic airlines must be controlled by U.S. citizens and that no more than 25% of the voting stock of those airlines can be controlled by foreign investors.
Initially, the DOT seemed to agree with claims by Virgin America's opponents that the carrier did not meet those guidelines. On Dec. 27, the DOT "tentatively" rejected Virgin America's application to begin flying. At the time, the agency said "Virgin America's close relationship with the U.K.-based Virgin Group indicates that the carrier is not under the actual control of U.S. citizens."
Virgin America responded in January with a proposal to restructure in a way that the company hoped would satisfy the DOT's concerns. Among the changes proposed by Virgin America were to shift the Virgin Group's voting stock in the carrier to a U.S. trust and to restrict the ability of Branson's company to veto decisions made by Virgin America.
Virgin America also said it would overhaul its branding agreement with the Virgin Group, something that would – in theory – allow the carrier to remove the Virgin name if it chose to do so and to form international partnerships with airlines not affiliated with the Virgin Group. The United Kingdom's Virgin Atlantic and Australia's Virgin Blue are just two of the several foreign carriers affiliated with the Virgin Group.
Those changes were apparently enough to satisfy the DOT.
The agency said around 1:15 p.m. ET today that it "tentatively" found that "Virgin America's plan to significantly reconfigure its ownership and management structure puts it back on track to meet strict U.S. citizenship tests under federal law."
Though the decision is tentative, the DOT's rulings in such matters have historically not been overturned. The DOT said "interested parties may file an objection to the proposed decision within 21 calendar days."
It wasn't immediately clear just how soon Virgin America could begin flying now that it's received the DOT's blessing, but the carrier identified its initial destinations in an announcement earlier this year.
The airline's inaugural route will be between San Francisco and New York JFK, with plans to add service to Washington Dulles, Los Angeles, San Diego and Las Vegas within its first nine months after being cleared to fly.
Virgin America plans a fleet of 34 jets, all Airbus A319 or A320 models.
Virgin America claims its fleet of A319 and A320 jets will have the largest seatback TVs of any U.S. carrier, and plans to offer free television and some free video games. Movies and additional games will be available for a fee. The carrier has also said it plans self-service mini-bars that would offer snacks and beverages throughout the flight.
By Ben Mutzabaugh, USA TODAY
Virgin America was tentatively cleared to fly today by the Department of Transportation, a move that paves the way for the start-up carrier to begin service possibly as soon as this spring.
The DOT's approval may mean the end of Virgin America's two-year battle to begin service in the U.S. The airline was founded in 2004 and had initially hoped to begin flying in mid-2005.
TODAY IN THE SKY: Read the latest in airline news
From its inception, Virgin America — affiliated with British tycoon Richard Branson's Virgin Group — ran into opposition from U.S. rivals and pilots union groups who contended that the start-up carrier did not comply with federal rules restricting foreign ownership.
Federal laws that date back to the 1920s and 30s maintain that domestic airlines must be controlled by U.S. citizens and that no more than 25% of the voting stock of those airlines can be controlled by foreign investors.
Initially, the DOT seemed to agree with claims by Virgin America's opponents that the carrier did not meet those guidelines. On Dec. 27, the DOT "tentatively" rejected Virgin America's application to begin flying. At the time, the agency said "Virgin America's close relationship with the U.K.-based Virgin Group indicates that the carrier is not under the actual control of U.S. citizens."
Virgin America responded in January with a proposal to restructure in a way that the company hoped would satisfy the DOT's concerns. Among the changes proposed by Virgin America were to shift the Virgin Group's voting stock in the carrier to a U.S. trust and to restrict the ability of Branson's company to veto decisions made by Virgin America.
Virgin America also said it would overhaul its branding agreement with the Virgin Group, something that would – in theory – allow the carrier to remove the Virgin name if it chose to do so and to form international partnerships with airlines not affiliated with the Virgin Group. The United Kingdom's Virgin Atlantic and Australia's Virgin Blue are just two of the several foreign carriers affiliated with the Virgin Group.
Those changes were apparently enough to satisfy the DOT.
The agency said around 1:15 p.m. ET today that it "tentatively" found that "Virgin America's plan to significantly reconfigure its ownership and management structure puts it back on track to meet strict U.S. citizenship tests under federal law."
Though the decision is tentative, the DOT's rulings in such matters have historically not been overturned. The DOT said "interested parties may file an objection to the proposed decision within 21 calendar days."
It wasn't immediately clear just how soon Virgin America could begin flying now that it's received the DOT's blessing, but the carrier identified its initial destinations in an announcement earlier this year.
The airline's inaugural route will be between San Francisco and New York JFK, with plans to add service to Washington Dulles, Los Angeles, San Diego and Las Vegas within its first nine months after being cleared to fly.
Virgin America plans a fleet of 34 jets, all Airbus A319 or A320 models.
Virgin America claims its fleet of A319 and A320 jets will have the largest seatback TVs of any U.S. carrier, and plans to offer free television and some free video games. Movies and additional games will be available for a fee. The carrier has also said it plans self-service mini-bars that would offer snacks and beverages throughout the flight.
