Virgin American DOT Review

[ImbracableCrunk]

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

 

[fam62c]

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.

 

[Mongolikecandy]

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.

 

[Hamburger]

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.

 

[tzskipper]

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

 

[B6Busdriver]

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?

 

[slaquer5]

trying to hide behind a DOT ruling? This is still a "free market economy",
S

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.

 

[rigger]

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!

 

[tzskipper]

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

 

[slaquer5]

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!

True, true and true

 

[Fubijaakr]

My only point is that "cabotage" is not happening here.S

Cabotage has NOTHING to do with jobs. It has EVERYTHING to do with foreign airlines operating in domestic US service. Sure you have a job today, TZ. But like the Merchant Marine, you could easily see Sir Dick replace you with a bunch of 3rd world pilots at the drop of a hat.

 

[Ralph Cramden]

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's real simple fam62c, all you have to do is read the show cause order granting VA's DOT certificate. There is a change of ownership provision called the 'put option' that was part of the order. It is in the DOT docket system for anyone to read.

AS, ALPA and AFA are contesting this provision after the order was issued. If the DOT reverses itself (possible but unlikely), the whole issue will wind up in the federal court system with any change stayed pending final resolution of the court case. Could take years to play out.

It only took the DOT two months to respond to a committee chairman congressman!

 

[tzskipper]

Cabotage has NOTHING to do with jobs. It has EVERYTHING to do with foreign airlines operating in domestic US service. Sure you have a job today, TZ. But like the Merchant Marine, you could easily see Sir Dick replace you with a bunch of 3rd world pilots at the drop of a hat.

With all due respect, VA is (unless proven otherwise) a US domestic carrier. I don't disagree about your job security concerns, as I have spent a career watching the US "legacy" carriers outsource US jobs via the different "alliances" that have been formed with foreign carriers. Specific to this, that is where the outrage should be focused.

Regards,

S

 

[Hamburger]

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?

It's pretty funny that you can look at VA pay rates and don't think they're coming after the employees. :laugh:

They don't have a better mousetrap. They have a work group bent over and taking it deep.

They are a foreign owned and controlled carrier operating within the United States. They will probably be able to put up some sort of puppet regime for the regulators, but it is true and everyone knows it.

 

[RDG]

It's pretty funny that you can look at VA pay rates and don't think they're coming after the employees. :laugh:

They don't have a better mousetrap. They have a work group bent over and taking it deep.

They are a foreign owned and controlled carrier operating within the United States. They will probably be able to put up some sort of puppet regime for the regulators, but it is true and everyone knows it.

And so far, still losing money.

 

[tzskipper]

It's pretty funny that you can look at VA pay rates and don't think they're coming after the employees. :laugh:

They don't have a better mousetrap. They have a work group bent over and taking it deep.

They are a foreign owned and controlled carrier operating within the United States. They will probably be able to put up some sort of puppet regime for the regulators, but it is true and everyone knows it.

Fwiw, I don't think anyone is unaware of the disparity in the pay... But, the original point of this discussion was your comment about cabotage. You are entitled to your opinion, so have at it if it makes you feel better.

When you get to the point of accepting the fact that VA does not partake in cabotage, and that probably 98% of the pilot group has paid ALPA/Union dues for more than 10 years (meaning the group understands the meaning "taking it deep"... and that most are very versed in the industry ups and downs), then continue a rational discussion. It is when you resort to feeling that you have to remind a particular group how their pay compares to others in order to make a point, that you lose some credibility.

S

 

[Hamburger]

A foreign owned and controlled airline operating within the United States is Cabotage.

I only bought up pay because YOU were forwarding a position that all other airlines 'come after the employees' and inferring that VA was somehow different in this regard. This is laughable.

Trying to paint my post as an attack on the pilot group (instead of the indictment on their management that it was) while calling my credibility into question is almost as funny as your last post.:laugh:

I'm quite sure that nobody is more aware of their pay than the pilots themselves. I certainly don't need to remind them of anything. I'm not offering to pay their mortgages, so if they want to work for that kind of pay, so be it. There's your Free Market. If other pilot groups allow their management to bully them by pointing at VA wages, then that's on them.

 

[relief tube]

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!

Sean Hannity, welcome.

 

[rigger]

Sean Hannity, welcome.

Nice compliment...thanks!! I do think I am more a Beck then a Hannity, but they come from the same mold, crazy thinkers these guys..... like believing in personal responsibility, taking care of ones self, taking care of ones entire family, helping people because it's the right thing to do not because some idiot thinks I should, believing the constitution of the United states is the LAW, paying all my own bills, not paying for other folks way in life, educating my children in the best place I can afford, only buying what I can afford, PROTECTING THE FREEDOMS OF EVERYONE IN THIS COUNTRY, Supporting, respecting and honoring those that put thier life in harms way for US, and most off wanting/DEMANDING each and every person in this country work for it's greatness not it's distruction!!!!!

Ya thats a list of what crazy guys these two are!!!! imagine believing in personal resposibility.....HA I must be crazy also!!!!!