If the supposedly bright folks at the US Department of Transporation still cannot work out whether or not Virgin America is in accordance with US ownership rules then they're in the wrong jobs. They should call in some expertise from Wall Street where there are a couple of thousand lawyers who could give them an answer in about 15 minutes (not that they would actually do it in 15 minutes I realise, time being money.)
Actually I don't think the DOT is struggling much with the legal niceties - what they're struggling with is finding the guts to stand up to incumbent carriers that have failed to create sustainable businesses over the past 60 years, in some cases have little hope of putting that right, and definitely don't want any start-ups - American or otherwise - adding to their problems.
Bear in mind that this is not about a forensic legal investigation of shady offshore shareholdings in a grey area of the law - it's about whether or not the great bulk of a nine-figure dollar investment is American money or not. I don't believe that is hard for the DOT to puzzle out.
But if you look at the objections from the US carriers what you find is that they're not really arguing about the cash. Their argument is about intellectual property - basically if a foreigner has any input into a US operation then that's fair game. In fact American is pretty much into mind-control: essentially according to them if the idea was thought-up by Richard Branson and his colleagues (which Virgin doesn't dispute) then that alone counts as foreign control.
And poor old Continental, well-known for its lack of sophistication in financial matters, insists that it just finds the whole thing too puzzling to understand - so it can't be allowed to happen.
It's to America's great shame that this nakedly protectionist nonsense is allowed to continue. Branson dreamed up Virgin America, US investors jumped onto the opportunity in a big way, and skilled American air transport professionals queued up to join it. All its benefits flow to the US economy. I don't think there is any respectable reason for the DOT to deny Virgin America operating authority - but if they think there is then they should spell it out immediately.
Virgin "America"? The financing is foreign. The planes are foreign-made. And management is foreign. Yet another company wanting to come in and profit off the Americans and take their money back home. If they truly wanted to be an "American" company, they could have at least had the decency to buy American planes. Lets support our own, for once. What would happen if an American tried to start-up a new airline in Europe? I'm sure the outcry would be far worse than the reception Virgin America is currently receiving. They went out and bought new planes, painted them up and held a fancy christening for an airline they don't even have permission to operate. Their brash arrogance is yet another slap in the face to America and its people, snubbing their noses at our laws and government. Sadly, we'll probably cower and give in, like always, and we'll see them flying our skies and taking our money. Mr Daly - the situation IS wrong but not on our part.
kracken
As an American myself, I agree. The DOT's posture on this is an anti-competitive stance in the guise of concern with complying with the law. Enough already ! No special protections in a free enterprise economy. Everybody has to compete !
Phil Perry
Terrific post Kieran and right on the money in my book. Couldn't help but link your post on my blog, I just posted on Virgin America today as well. Thanks
StateOfTheAirlines
Kracken, sorry but you're wildly wrong. There isn't an airline in the world that cares if its aircraft are 'American' (whatever that means) or 'European' (ditto.) In fact there's not much in it either way anymore in terms of earning money for the national coffers.
And as for an American launching in Europe. Yes there are ownership rules, but...every European can start an airline in every other European country and routinely does so. And here's a quick list of the nationalities of the CEOs and owners (controllers?) of the first wave of UK-based low-cost carriers over here: Ryanair - Irish/Irish; Easyjet - New Zealand/Greek; Go - American/UK; Buzz - English/Dutch.
Anyway, I give you credit for your unashamed admission in your final sentence of being an out and out protectionist. I guess it will be up to us Europeans to protect capitalism in the 21st century.
Kieran Daly
No, I think you ARE missing the point.
They origionaly tried to get approval while they KNOWINGLY violated the ownership laws. Sweeping it under the carpet and painting a picture of technicly legal ownership isn't good enough in this case. Clearly thier intent to carve out marketshare by clear violations of US law regarding anti-trust, and airline ownership is such that I don't know that they should ever be allowed to start operations.
Its very convient that you fail to mention thier operation plans. Or lack of them. So far all they have been willing to admit to is wanting to run on some of the MOST competative routes in CA which already have some of the lowest margins (negative?) in the US. Then they go on to BOAST that they will operate said routes at fares that can not possibly lead to anything but a loss.
So what you have is a airline that admits to operating at a loss from day one to gain marketshare. NOT just fixed cost losses, but flights that will loose them more money than if they parked the plane at the end of the runway and threw keggers in the airport lounge. Its influenced if not actualy "owned" by Branson, who has a nifty goal of influencing or owning nearly everything he can see/touch/hear regardless of the cost to him or his investors. What would the EU say to a russian/chinese/indian/UAE/whatever airline starting up in the EU under these same goals? To take market share from established carriers, on routes with lots of competition, regardless of the monetary losses to do so?
Would you like it if say American Airlines decided to startup a new airline in europe for the sole purpose of making EU airlines suffer operating losses from loss of revinue? After all its in the name of competiton which can only be good for the consumer right? Right? who cares when a airline or two fails leaving only one running the route and the fairs double or triple the old price before the "needed freemarket competition" ran the others under with predatory pricing.
My guess is that your little blog has much less to do with Virgin America getting delays, and more to do with your Anti-american views. Which I am fine with, just don't confuse your bias, with reality. Hating the french doesn't make the eiffel tower any shorter.
Witte
Kracken has the mind-set of the US carriers which fleeced the public for years and have been unable to compete since deregulation in the 1970s. What would the world be if no European bought American computers, software, movies, music, etc in favour of the home product? Poorer, in a word. Most civilised countries allow 49% ownership and extensive foreign involvement in airlines to their great benefit. Virgin Atlantic (British) is 49% owned by Singapore Airlines. The American legacy carriers are parasites on the American people, who are crazy to indulge, let alone support, them.
John Band
So, why wouldn't a US carrier set up a European operation if they thought their name would have value in the European market? All the US carrier could do is lend its name to the venture, but if there are Europeans who are prepared to put money into the venture it could happen. It would be the same as American Fast Food companies and drink companies that license their name. I think Mesaba did try to set up a UK base, didn;t they.
So, would people use an airline called Continental or American or Delta to fly Paris to Rome? Would Europeans accept(say) six connecting flights through (say) Zurich every day between London and Athens rather than three daily non stop flights.
The airline would not look very American, because staff would be hired locally. Doing this may not have so much value for US carriers as doing business with Alliance partners.
If Americans are offended by the idea of an airline called virgin flying within America, they can still choose lots of other airlines for their travel needs.
Alan Girvan