Thursday, August 17, 2006

U.S. resistance to Virgin America

A Reuters article says that start-up carrier Virgin America is causing "turbulence" in the U.S. airline industry, even before getting its license to operate.

The article, published on, says:
Incumbent carriers, led by Continental Airlines, have lobbied hard to keep Virgin America from getting off the ground.

Those efforts, which have slowed Virgin America's efforts to gain US government approval to start flying, show how intense competition is in the US airline industry and how fragile its recent recovery may be.

"For the first time in six years roughly, the airlines are starting to experience some profitability, and the last thing that the domestic carriers want to see is new competition," said Dan Petree, dean of the college of business at Embry-Riddle Aeronautical University.

Virgin America has until Wednesday to respond to industry objections to its application for an airline license, which was initially filed last December. The US Department of Transportation then has up to 180 days to make a decision on whether to allow the airline to operate.

Continental and others have attacked Virgin America's links to British-based Virgin Group, which holds a 25 percent stake in the company, lends the airline its brand and has promised to provide financing.

The airlines say that Richard Branson's Virgin Group, which has stakes in airlines in Europe, Australia, and Nigeria, effectively controls the US airline in violation of US law, which restricts foreign control of domestic airlines.

"We have absolutely no opposition to start-up discount airlines," said Continental spokesman Dave Messing. "Our only concern is that, since we abide by US laws, our competitors also abide by US laws."
Virgin America, which says it is controlled by U.S. citizens and conforms to U.S. law, says rival airlines are trying to limit competition by brining up the foreign control argument.

Read the whole article here: Virgin America Causing US Airline Turbulence -

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