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Virgin American DOT Review

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ImbracableCrunk

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http://aviationblog.dallasnews.com/archives/2009/06/dot-is-looking-into-virgin-ame.html


DOT is looking into Virgin America ownership


1:06 PM Mon, Jun 08, 2009 | Permalink
Terry Maxon/Reporter Bio | E-mail | News tips The U.S. Department of Transportation is reviewing Virgin America's ownership to make sure it hasn't gone over the limits for foreign ownership and control.
In a letter to U.S. Rep. James Oberstar, DOT official Roy W. Kienitz said the department was looking into Virgin America's ownership structure:
"Earlier this year. Virgin America informed the Department of proposed transactions involving its United States shareholders. Presently, the Department is reviewing these transactions and the results of this review will inform any future action of the Department on this matter."​
The letter from the DOT Under Secretary for Policy was dated June 2, but added to the DOT's online documents Monday.
Alaska Airlines, which competes with VA in a number of West Coast markets, had urged the government in February to review Virgin America's ownership structure, citing VA's public filings and media reports.
In a March reply, Virgin America called the media reports inaccurate, said its foreign ownership and control remained within the 25 percent limit allowed by federal law and inferred that Alaska was just making mischief:
"Alaska has demonstrated that it can do no more than tell the Department what has been publicly reported in the press, but has not otherwise provided any basis to justify either its initial Petition or its subsequent Motion."​
Oberstar, D-Minn., chairs the House Committee on Transportation and Infrastructure, which oversees aviation matters. In an April 2 letter to DOT Secretary Ray LaHood, Oberstar urged the government to review VA's ownership:
"I find it significant that in its answers opposing these petitions, Virgin America does not deny that there has been a sale or other transfer of financial interest in the stock. If Virgin had been able to make this denial, it presumably would have done so, since this would be a strong, if not irrefutable, argument for denial of the requests for an investigation."​
Approval of Virgin America's right to fly was held up because of a lengthy investigation into whether the involvement of the Virgin Group and Sir Richard Branson exceeded U.S. limits.
Keep reading for the full Kienitz letter.


The Honorable James L. Obeistar
Chairman, Committee on Transportation
and Infrastructure
U. S. House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
Thank you for your letter of April 2 to Secretary LaHood concerning the citizenship of Virgin America, Inc. (Virgin America). I am responding to your letter on his behalf.
All United States air carriers are required to notify the U.S. Department of Transportation (Department) when undergoing or proposing to undergo a substantial change in any area affecting their fitness, i.e., operations, management, or ownership and citizenship. Upon such notification, the Department generally commences a review of the air carrier's continuing compliance with both fitness and citizenship requirements. Earlier this year. Virgin America informed the Department of proposed transactions involving its United States shareholders. Presently, the Department is reviewing these transactions and the results of this review will inform any future action of the Department on this matter.
As you are aware, subsequent to press reports announcing Virgin America's transactions, Alaska Airlines, Inc. (Alaska), filed a petition in the docket requesting that the Department conduct a public review of Virgin America's citizenship. Several pleadings from interested parties were filed in response to Alaska's petition. Since this matter is contested, I am unable to comment on its merits. I can, however, assure you that the Department is reviewing the information provided by the interested parties.
As is our normal practice, I am placing a copy of your letter and this response in Docket DOT-OST-2009-0037 as a contact outside the record of this matter. I appreciate your interest in this proceeding.
Sincerely yours,
Roy W. Kienitz
 
My guess is that VA has some type of unusual structure where the "controlling" interest is held by US citizens but the majority of the equity is not. It looks to me like the DOT doesn't require that a US airline has to be 80% (or 75%, something like that) "owned" by Americans it just has to have that percentage of control. It seems that all an airline would need to do would be to define a small amount of the shares as "voting shares" and have them held by American citizens but have most of the regular equity structured as "non-voting" shares. Thus an airline could be majority owned by foreigners but "controlled" by Americans and pass the DOT test. Richard Branson is too smart and too well connected to allow his company to be shut down because of this. I think that this whole investigation by the DOT will amount to nothing and VA will go on. If VA doesn't make it it will be for financial reasons not a legal technicality.
 
Why is United sitting flaccidly by while Branson works to put them out of business?

All the politicians are all goo goo ga ga to support new "low cost" start up airlines with tax breaks and incentives to spur new hiring, while ignoring the fact an airline like Delta, or United pays their taxes and fees while employing tens of thousands of Americans.
 
Why is United sitting flaccidly by while Branson works to put them out of business?

All the politicians are all goo goo ga ga to support new "low cost" start up airlines with tax breaks and incentives to spur new hiring, while ignoring the fact an airline like Delta, or United pays their taxes and fees while employing tens of thousands of Americans.

All the while shirking financial responsibilities to its vendors and unions while "getting lean" in bankruptcy.
 
Fam62 hit the nail on the head.

They will come up with some shell game nonsense and pass review. It all depends on what your definition of 'is' is........

That is why the rest of the airline community really dropped the ball on this one. If everyone had signed the petition and treated as the Cabotage that it is, the DOT would've been forced to take it seriously. Squeaky wheel and grease. The DOT is going to give it exactly as much importance as the airline community has.

United sitting there and letting this happen is sickening. Tilton probably wants them there. The sooner he can liquidate this once great airline and line his pockets, the better.

It wouldn't surprise me one bit if they opened the books and found out that Sumbitch was the American controlling interest.
 
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Fam62 hit the nail on the head.

They will come up with some shell game nonsense and pass review. It all depends on what your definition of 'is' is........

That is why the rest of the airline community really dropped the ball on this one. If everyone had signed the petition and treated as the Cabotage that it is, the DOT would've been forced to take it seriously. Squeaky wheel and grease. The DOT is going to give it exactly as much importance as the airline community has.

United sitting there and letting this happen is sickening. Tilton probably wants them there. The sooner he can liquidate this once great airline and line his pockets, the better.

It wouldn't surprise me one bit if they opened the books and found out that Sumbitch was the American controlling interest.

Creating U.S. jobs is now "Cabotage"? It is the managements at the competing carriers that the employee groups ought to be pissed off at. I mean, how about putting out a "better" product to compete with, instead of beating on the employees and trying to hide behind a DOT ruling? This is still a "free market economy", so management should build a better mousetrap.

S
 
Creating U.S. jobs is now "Cabotage"? It is the managements at the competing carriers that the employee groups ought to be pissed off at. I mean, how about putting out a "better" product to compete with, instead of beating on the employees and trying to hide behind a DOT ruling? This is still a "free market economy", so management should build a better mousetrap.

S

I guess that how you justify it when you work for VA huh?
 
So you don't believe anyone should obey US laws. I take it you do not pay your taxes either. Just tell the IRS to manage there money better.


Why should anybody obey these laws??? After all the government does not Obey their own Laws.....Czars, Bailouts, putting bond holder behind behind other entities, firing a CEO of a Private company.....nominating a judge that thinks "feelings should be on par with the law!!!!!!! I could go on and on and on, All the above is just AGAINST THE CONSTITUTION!!!!! What law is greater then that in this USA?????

But not to this or the last government!!!!!

And by the way Ask Gietner, Daschel and a multitude of others that did not pay ALL their taxes (until convenient) about what the IRS wont do!!!! ....O ya you or I do this and we will be arrested!
 
So you don't believe anyone should obey US laws. I take it you do not pay your taxes either. Just tell the IRS to manage there money better.


Actually, just the opposite. My only point is that "cabotage" is not happening here. In addition, imo VA will be shown to be in compliance. As another post stated, the Virgin Group and the US investors are most likely not that foolish to have put their investment in harms way, by trying to skirt US law.

Do you not believe in allowing the marketplace to decide winners and losers, or would you prefer to hide behind a mediocre management team that feels the only way to be profitable is to continually go after the employees and not invest in putting out a better product?

S
 

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