Getting off the ground has never been easy for startup airlines, but a high-profile effort by friends of high-flying Virgin chief Richard Branson has been stalled at the regulatory gate. Now, Hamlet, Prince of Denmark, and Arnold Schwarzenegger, the 'Terminator' of Hollywood fame, are involved in the long-running bid by Virgin America to get clearance to start a new low-fares airline.
Since spring of 2004, Virgin America has talked up its plans to launch transcontinental US flights from its San Francisco base, building up a fleet of 12 aircraft within a year. It has 35 firm orders for Airbus A320s and options on a further 75 in the single-aisle family. Virgin America has secured $177.3m in funding, including $88.9m from two US private equity groups. Virgin Atlantic-affiliated companies will invest $29.8m in equity and provide $58.6m in debt financing to meet US limits on foreign investors in a US airline to 25% of voting rights; to avoid any "semblance" of control by overseas interests, other investment groups have put up money. Since December, Virgin's application for the go-ahead has sat at the DoT, far beyond, say Virgin America chief Fred Reid, the time frame the agency usually follows. And during the five months, the debate about foreign ownership has raged and other carriers, most vocally Continental, also the leader of the opposition to relaxing the investment rules, have raged at Virgin, arguing it exceeds the foreign-capital limits and that it would be downright un-American. Reid insists that Virgin America passes all the citizenship tests with flying colours and flags.
A clearly frustrated Reid has filed reams of paper to explain the ownership structure, and has begun lining up big name supporters, among them California Governor Arnold Schwarzenegger, known as 'The Governator'. He filed a request that the regulators "take every appropriate step to expeditiously review and approve Virgin's application". And Virgin has demanded that the regulators act on its application and reject demands by opponents that it file more documents. Reid says of his frequently filing opponents, "Frankly, they're wasting taxpayer money simply to avoid the competition they fear in the marketplace".
Virgin's last demand for action has provoked a near-literary response from Continental, which opens its response with " 'Virgin America doth protest too much'," a quote it promptly identifies in a footnote, right down to the line in Hamlet. Not sure if Reid is looking for a good line from the Bard, but clearly the big question for him is, is Virgin America to be or not to be.