http://yahoo.reuters.com/news/articl...15_N22340344&type=comktNews&rpc=44

Quote: NEW YORK, Dec 22 (Reuters) - Virgin America Inc., a low-cost airline with a name made famous by British entrepreneur Richard Branson, expects the U.S. government to reject its application to start flying, a spokeswoman said. The company announced earlier on Friday that it had completed the last formal step in the U.S. Federal Aviation Administration's airline certification review and only needed approval from the Department of Transportation.

[Edited 2006-12-22 23:39:47]

Quoting Jimyvr (Thread starter): NEW YORK, Dec 22 (Reuters) - Virgin America Inc., a low-cost airline with a name made famous by British entrepreneur Richard Branson, expects the U.S. government to reject its application to start flying, a spokeswoman said.

Good, the last thing we need is another airline.

Quoting Jimyvr (Thread starter): NEW YORK, Dec 22 (Reuters) - Virgin America Inc., a low-cost airline with a name made famous by British entrepreneur Richard Branson, expects the U.S. government to reject its application to start flying, a spokeswoman said.

Why would they say anything like that even before DOT's announcement?

Quoting Jetjack74 (Reply 1): Good, the last thing we need is another airline.

I do tend to agree with you on that one. I just wonder on what grounds the rejection will be based.

It was obvious from day 1 they were trying to circumvent the rules, at least to anyone objective.

I wonder if all the foreign execs starting up SkyBus are going to have the same problem.

It's simple guys: FOREIGN CONTROL IS NOT ALLOWED. You can't try to disguise it, as we aren't that dumb...  

Quoting Ikramerica (Reply 4): It was obvious from day 1 they were trying to circumvent the rules, at least to anyone objective. I wonder if all the foreign execs starting up SkyBus are going to have the same problem. It's simple guys: FOREIGN CONTROL IS NOT ALLOWED. You can't try to disguise it, as we aren't that dumb...

Wow.. that hardly seems to represent a free market position now doesn't it. Who cares who owns it? I never understood these stupid protectionist sorts of laws.  

Quoting Jimyvr (Thread starter): Quote: NEW YORK, Dec 22 (Reuters) - Virgin America Inc., a low-cost airline with a name made famous by British entrepreneur Richard Branson, expects the U.S. government to reject its application to start flying, a spokeswoman said. The company announced earlier on Friday that it had completed the last formal step in the U.S. Federal Aviation Administration's airline certification review and only needed approval from the Department of Transportation.

Good. We don't need them. I like the current state of Global Interaction. I'm ready for Pax Americana.   

Quoting Osiris30 (Reply 5): Who cares who owns it?

The U.S. government, as there is always the slim possibility that civilian aircraft may be needed in time of war and/or national emergency. Can't have a potential conflict of interest if those aircraft are foreign-controlled.

Quoting Osiris30 (Reply 5): Wow.. that hardly seems to represent a free market position now doesn't it.

Oh spare me - you're grasping at straws here. Fact of the matter is that every industry has some degree of regulation, and wishing Virgin America to not start flying is wise since they will inevitably weaken the industry, not strengthen it.

Quoting EA CO AS (Reply 7): The U.S. government, as there is always the slim possibility that civilian aircraft may be needed in time of war and/or national emergency. Can't have a potential conflict of interest if those aircraft are foreign-controlled.

Exactly. A largely unknow fact by Non-US citizens.   

Quoting Ikramerica (Reply 4): FOREIGN CONTROL IS NOT ALLOWED.

Which is really a shame in this day and age of globalization.

The US and its consumers by not allowing the industry to seek out foreign capital and cross ownership, if anything becomes the looser in this.

Just as with countless other industries national barriers mean less and less these days except with US airlines which are stuck abiding by archaic protectionist rules drafted in the 1930s.

I'm all for a vibrant and competitive US industry, however closing ourselves off the outside is certainly not the answer to providing true competitive benefits and choices for the consumer and nation.

"The law prohibits a foreign equity stake of more than 25 percent in a U.S. airline.

British-based Virgin Group, which has stakes in airlines in Europe, Australia and Nigeria, holds a 25 percent stake in the company"

Uh........ I don't think you need an MBA to understand those sentences. Sounds like another case of desperate airlines trying to stall startups.

[Edited 2006-12-23 01:26:26]

Quoting EA CO AS (Reply 7): The U.S. government, as there is always the slim possibility that civilian aircraft may be needed in time of war and/or national emergency. Can't have a potential conflict of interest if those aircraft are foreign-controlled.

Right because the British and American's aren't going to side on an issue together...   

Quoting Glideslope (Reply 8): Exactly. A largely unknow fact by Non-US citizens.

Remember strategic interests next time you say anything about Airbus funding!

Quoting Laxintl (Reply 9): Which is really a shame in this day and age of globalization.

Quoting Laxintl (Reply 9): I'm all for a vibrant and competitive US industry, however closing ourselves off the outside is certainly not the answer to providing true competitive benefits and choices for the consumer and nation.

Quoting AirWillie6475 (Reply 10): Uh........ I don't think you need an MBA to understand those sentences. Sounds like another case of desperate airlines trying to stall startups.

  

This may be posturing.
With the push for consolidation the DOT is would be caught between a rock and a hard place if they diasaprove.
The door should be open for more business.

Quoting Ikramerica (Reply 4): I wonder if all the foreign execs starting up SkyBus are going to have the same problem.

IIRC, the funding is put up through American Institutions and the execs are going to be based in CMH. I may be wrong, but that's the impression I was under. The problem VA is having, are the investors not being American Institutions. Their execs are in SFO and it is run from there. Please correct me if I'm wrong, but that's how I understand it.

Quoting Osiris30 (Reply 11): Right because the British and American's aren't going to side on an issue together...

That's no the point. If somebody wants to change the law, do it through the congress, not through DOT. Besides, It's gonna open the gate for other investors from other countries, which might not be very friendly to the US, to ask for the same permission.

Quoting Osiris30 (Reply 11): Remember strategic interests next time you say anything about Airbus funding!

Totally two different case. US domestic air market does not bear any effect on other countries, and the fact that US domestic airline market is already competitive, would not change if foreign ownership is allowed.

Airbus vs. Boeing is another case. It affects the competition of world aircraft manufacturers.

Quoting Laxintl (Reply 9): Which is really a shame in this day and age of globalization. The US and its consumers by not allowing the industry to seek out foreign capital and cross ownership, if anything becomes the looser in this. Just as with countless other industries national barriers mean less and less these days except with US airlines which are stuck abiding by archaic protectionist rules drafted in the 1930s. I'm all for a vibrant and competitive US industry, however closing ourselves off the outside is certainly not the answer to providing true competitive benefits and choices for the consumer and nation.

Really? Globalization? I am not an American, and I don't know if I will stay in the US after my education. If you want to talk globalization, why don't you open your immigration gate to foreigners to get jobs here. Let them compete for your job. After all, it's globalization, and economy wins if the best does what it's best at.

The fact is that a country sets its own limitation to what is socially acceptable and not acceptable. That's what we call law. It is up to a country and its population to decide what's best for them, hence democracy.

US airlines industry has enough competition, and opening it to foreign ownership would have minimal impact on the competition itself. The carrier might kill another Airline, but in the end, consumer will see minimal difference.

Cheers,
PP

Quoting PolymerPlane (Reply 14): Totally two different case. US domestic air market does not bear any effect on other countries, and the fact that US domestic airline market is already competitive, would not change if foreign ownership is allowed.

Not at all.. to play devil's advocate, Airbus/EADS are of vital interest to the EU in the event a war breaks out and they have no allies and need someone to build their planes.... And the only reason the US Domestic Air Market doesn't 'bear any effect on other countries' is because the US won't let other contries participate!

Quoting PolymerPlane (Reply 14): Airbus vs. Boeing is another case. It affects the competition of world aircraft manufacturers.

The only reason it's any different is the US won't *allow* a Brit to own a US airline... otherwise your statement would prove false.

Both are protectionist, self-serving rackets..

Quoting Osiris30 (Reply 15): Both are protectionist, self-serving rackets..

The job of the govt... 

Quoting Osiris30 (Reply 15): The only reason it's any different is the US won't *allow* a Brit to own a US airline... otherwise your statement would prove false. Both are protectionist, self-serving rackets..

        

The U.S. has consistently remained one of the most open and objective nations in granting travel rights, bilateral agreements, and "free market" aviation policies.

The fact is, transportation serves an incredibly sensitive role in the function of any industrialized nation. For that reason, domestic transportation and domestic infastructure should remain in the control of domestic investors. That goes for the U.S., Germany, Australia, or who ever.

U.S. cabatoge rules allow foreign investors to own 49% of a domestic airline. From an investment standpoint, that allows ample opportunities to make a profit by creating an airline. It does however require 51% of U.S. firms to hold the remaining share. There is tremendous capital available in the U.S. right now, so why change and/or circumvent the law?

Calling U.S. domestic aviation a "racket" is both dumb and a cheap shot. Fares have been so low that many carriers bled multi-billion dollar loses over the course of several years. Even now that many legacies have "recovered," fares remain artificially low.

The last 18 months have exposed just how vulnerable the U.S. economy is to foreign intervention, hell OPEC has as much power as the Federal Reserve. Free market does not mean handing security of domestic affairs to whomever has an open checkbook. Transportation is absolutely vital to the American economy, and Virgin America needs to play by the existing rules...

Quoting Osiris30 (Reply 11): Remember strategic interests next time you say anything about Airbus funding

Quoting Osiris30 (Reply 5): Wow.. that hardly seems to represent a free market position now doesn't it. Who cares who owns it? I never understood these stupid protectionist sorts of laws.

Most governments protect there flag carriers. I seriously doubt the governments of France, Germany, or the UK government would allow an American Airline to come in and purchase one of their flag Carriers. I know it is a start up airline but the rules apply so you have to deal with it and if your cheating the system then you deserve to get denied. Have them follow the rules and then let them fly. Sure American carriers would benefit from tighter financial ties from stronger foreign carriers but nobody knows what would happen if foreign ownership percentage was increased or total ownership was allowed. Just face it some industries are considered off limits for national reasons.

Quoting Ikramerica (Reply 4): It was obvious from day 1 they were trying to circumvent the rules, at least to anyone objective. I wonder if all the foreign execs starting up SkyBus are going to have the same problem. It's simple guys: FOREIGN CONTROL IS NOT ALLOWED. You can't try to disguise it, as we aren't that dumb... Wink

You're completely right. It's just the law in this country (and surprise, many other countries as well, Lufthansa is only allowed to be up to 50% foreign owned before the law allows the company to rectify this....). Japan privatized its post office, but FedEx is not allowed to buy it. Things of vital importance to a country must be protected. America has some of the most liberal laws anywhere in this regard.

Quoting Osiris30 (Reply 5): Wow.. that hardly seems to represent a free market position now doesn't it. Who cares who owns it? I never understood these stupid protectionist sorts of laws. Sad

It's not protectionism, foreign owners own all sorts of different things in this country, telecom, banks, manufacturing, service, all assortment of different businesses, but certain issues of vital importance to the wellbeing of the nation, issues like national security, any nation must protect. The airlines are too important to allow any conflicts of interest which foreign ownership might create, should the aircraft be needed in time of war, likewise, the airlines are too central to transportation of people, cargo, letters, etc. in this nation. Domestic ownership rules are to ensure this isn't disturbed for any reason, and in issues of international law, make it far easier for the US gov't to step in, if need be, with fewer complications. For a number of reasons, it makes sense, and similar laws are in place all over the world. Please bear in mind that it was not long ago European governments owned their national airlines (some still do, or own significant shares).

Quoting Glideslope (Reply 8): Quoting EA CO AS (Reply 7): The U.S. government, as there is always the slim possibility that civilian aircraft may be needed in time of war and/or national emergency. Can't have a potential conflict of interest if those aircraft are foreign-controlled. Exactly. A largely unknow fact by Non-US citizens. checkeredflag

We're not the only nation to have that. Nations all over have similar laws for the same reasons we do. This isn't the only industry which foreign ownership is not allowed in.

Quoting Laxintl (Reply 9): Quoting Ikramerica (Reply 4): FOREIGN CONTROL IS NOT ALLOWED. Which is really a shame in this day and age of globalization.

Not really, even in the age of globalization, nations have to protect their vital interests and security. Again, the US is not the only nation that has laws like this..... globalization and free markets are alive and well

Quoting Osiris30 (Reply 11): Quoting EA CO AS (Reply 7): The U.S. government, as there is always the slim possibility that civilian aircraft may be needed in time of war and/or national emergency. Can't have a potential conflict of interest if those aircraft are foreign-controlled. Right because the British and American's aren't going to side on an issue together... sarcastic

That's not the point, if we allow Brits to own US airlines, we have to open it up to Saudis, Brazilians, French, Chinese, and firms from everywhere else to own American airlines, and at some point, it may not be someone who sides with the US, moreover, in terms of international law, the US government has more powers over domestic owners of businesses as well. Would Britain allow a group of US investors to buy British Airways? Australia demanded QF be bought by a majority Australian coalition. Countries everywhere have the same rules like this.

Quoting Osiris30 (Reply 15): Quoting PolymerPlane (Reply 14): Airbus vs. Boeing is another case. It affects the competition of world aircraft manufacturers. The only reason it's any different is the US won't *allow* a Brit to own a US airline... otherwise your statement would prove false. Both are protectionist, self-serving rackets..

That's more of a side effect. There are legitimate reasons for such laws.

Quoting DfwRevolution (Reply 17): The U.S. has consistently remained one of the most open and objective nations in granting travel rights, bilateral agreements, and "free market" aviation policies.

Yeah, BUT it is the among MOST protectionist in other areas, particularly the argricultural and services sectors.

You want to see a true free trade nation? Look to NZ!

Gemuser

Quoting Gemuser (Reply 20): Yeah, BUT it is the among MOST protectionist in other areas, particularly the argricultural and services sectors.

BUT that has absolutely nothing to do with the relevant subject matter. We are talking about: 1) Ownership, not import/export regulations and 2) Commercial aviation

Not to mention, you are way off base about the U.S. services industry being protectionist. They are the ones going "off-shore" faster than anyone.

Quoting DfwRevolution (Reply 21): Yeah, BUT it is the among MOST protectionist in other areas, particularly the argricultural and services sectors. BUT that has absolutely nothing to do with the relevant subject matter. We are talking about: 1) Ownership, not import/export regulations and 2) Commercial aviation

Do you really think that one does not affect the other? Sorry the real world does not necissarily work that way in all cases. Despite that lopped sided so called FTA the Oz government signed with the US, both sides of politics have linked the matters, no movement on the ag sector, no open skys policy.

The US services sector is very highly protected. Try and start serving the US market from within the US in services, almost impossiable. Which is one part of the reason you are having so much off shoring.

Gemuser

Quoting Osiris30 (Reply 15): The only reason it's any different is the US won't *allow* a Brit to own a US airline... otherwise your statement would prove false.

Wait what? tell me how foreign policy ownership for US domestic market has any anti-competitive effects on the Foreign airline market?

How does not owning an airline in US domestic market affects foreigner negatively?

Airbus's and Boeing's subsidy has a direct impact to each others' market. Boeing does not have to be an owner or invade Airbus's market to feel the effects.

I am wondering how do you feel if a stranger come to your place and open a shop right on your front yard and say, "I am entitled to open my business here for the sake of competition."

Cheers,
PP

Quoting Osiris30 (Reply 11): Quoting EA CO AS (Reply 7): The U.S. government, as there is always the slim possibility that civilian aircraft may be needed in time of war and/or national emergency. Can't have a potential conflict of interest if those aircraft are foreign-controlled. Right because the British and American's aren't going to side on an issue together...

And if the law was written to say, "Any foreign government EXCEPT Great Britain," you'd be upset about that instead.   

Quoting BillReid (Reply 12): This may be posturing.

Precisely - you lessen the blow by making a big deal out of it far in advance.
It's no different than saying you expect earnings to be lower than expected a few weeks before you actually report quarterly results so the market doesn't punish you as badly for not meeting your numbers.

Virgin America is terrified of looking like a failure if the DOT turns them down, so they lessen the fallout by saying, "Well, like we said - we EXPECTED that." It also probably helps them by floating the "..and thanks to these archaic rules, we can't start bringing low fares to our consumers!" balloon to the public.

Quoting EA CO AS (Reply 24): Virgin America is terrified of looking like a failure if the DOT turns them down, so they lessen the fallout by saying, "Well, like we said - we EXPECTED that." It also probably helps them by floating the "..and thanks to these archaic rules, we can't start bringing low fares to our consumers!" balloon to the public.

Agreed! They are just trying to blow smoke up the public's butt to save face and avoid embarassment. If they really knew this might happen, why did they start this whole thing up and take airplanes?! Makes no sense. Now John Q. Taxpayer is having to pay for all of this if DOT says 'No'.

May I suggest that this is really not news to VA simply because they have already released out a significant portion of their existing fleet? Much ado about nothing methinks...

Quoting 77411 (Reply 18): Most governments protect there flag carriers. I seriously doubt the governments of France, Germany, or the UK government would allow an American Airline to come in and purchase one of their flag Carriers.

I'm not agreeing with them either... but.. I'm not going to be two faced and call for the abolition of government involvement with Airbus, while turning a blind eye to what is essentially a bunch of BS re VA.

Every arguement I've seen thrown up here is: "Well they do it, why shouldn't we" or "What happens if there's a war and we need the planes".

Come on guys. Branson owned 25% of VA. It's well within the rules. But because Branson didn't hide his 25% ownership and his name is associated with it, the existing carriers crapped their drawers and bitched and moaned to daddy to help out.

This has nothing to do with laws. There are plenty of 'wholly owned' American companies controlled by people in other countries. Don't delude yourselves into justifying this action as 'legal'. It's about as legal as... on second thought I won't go there.. suffice it to say, this is a farce.

Quoting DfwRevolution (Reply 17): and Virgin America needs to play by the existing rules...

They were. They didn't ask for an exemption and Branson only put up 25% of the money. The rules are now being changed to accomodate the interests of the existing carriers.

If existing carriers can't survive startups and the startups win, that's called capitalism... you may have heard of it being from the US.

As Dennis Leary once said: Life sucks, get a f***ing helmet.

[Edited 2006-12-23 07:06:26]

The thread below was started first. Both have quality conversation. We don't however need two on the same topic. Since this is the second, and therefore duplicate thread, this one will be archived. Please continue in the other thread:
WSJ: Virgin America Expects DOT Rejection (by N328KF Dec 22 2006 in Civil Aviation)