Virgin America to fight DoT rebuff, with carrier set to appeal against decision to deny certification over ownership concerns

Washington DC
Source:
This story is sourced from Flight International
Subscribe today »

Carrier to appeal against US government's decision to deny certification for start-up over ownership concerns

Virgin America remains committed to launch low-cost US domestic services despite the US Department of Transportation (DoT) decision to deny the start-up's certification, and is to file an appeal.

The DoT announced last month its decision to block the launch because of concerns that foreigners, notably UK entrepreneur Sir Richard Branson, would have undue influence on the carrier.

Virgin America says that while it disagrees with the DoT's view, it respects the decision and intends "to use the order as a roadmap to address the issues raised and to demonstrate to the DoT that Virgin America will meet all ownership and control requirements".

The DOT had originally set 10 January as the deadline for an appeal.  Virgin America has requested an extension until 16 January.  "We plan to respond so that we may move forward with DoT certification and launch our airline...we remain committed to getting our wings," says Virgin America.

The airline had been preparing for an early 2007 inauguration from its San Francisco base, and had taken delivery of several Airbus A320s to facilitate the launch.
The DoT denied the application because of concerns that Branson, who among other roles is chairman of Virgin Atlantic, has a controlling influence on the company as well as a lack of evidence that Virgin America met US ownership requirements.

The DoT "tentatively concludes that Virgin America's close relationship with the UK-based Virgin Group indicates that the carrier is not under the actual control of US citizens", it says.

The DoT adds that to proceed further with the air operator's application, "Virgin would have to revise its ownership, corporate structure and associated agreements to be 75% owned and actually controlled by US citizens before it can receive an operating certificate".

The decision was applauded by Continental Airlines, which had led the attack on the start-up, and says: "We believe the DoT reached the right conclusion when it determined that Virgin America is controlled by foreigners."

It adds: "As we have consistently said, Continental is not opposed to the Congress examining alternatives to the current law prohibiting foreign control of US air carriers. However, until the law is changed, all US carriers or prospective carriers must comply with current law."