United Airlines and Alaska Airlines have the most to gain should Virgin America cease operations in the midst of renewed accusations that the startup does not meet US citizenship requirements.
Launched in August 2007 after a lengthy battle to convince regulators that the airline was a US citizen, Virgin America now accounts for 23% of the seats on its transcontinental and intra-West Coast routes, says Morgan Stanley analyst William Greene.
The examination shows that roughly 9% of United's domestic seats are exposed to direct compeition from Virgin America, while 7% of Alaska's domestic capacity is exposed to the San Francisco-headquartered carrier.
Greene estiamtes that United has 40% marketshare on Virgin America's routes while Alaska accounts for 10% marketshare in the carrier's markets.
Virgin America is being forced to defend its ownership structure as Alaska has launched a public campaign asking US regulators to examine Virgin America's citizenship staus amid reports its US investors have put their stake back to Virgin Group.
US Federal law requires US-based carriers be at least 75% owned and controlled by American investors.
Virgin America dismissed Alaska's claims as merely a competitor concerned about losing in its hometurf. Since Virgin America has entered Alaska markets, fares have dropped 14% and traffic has increased 34%, a Virgin America spokeswoman says.