Final Approval From DOT Friday Gives Green Light To Startup Airline

Move over JetBlue and Southwest -- there's a new player in the City by the Bay, with goals of expansion from its San Francisco base of operations.

After three years of sometimes contemptuous debate, low-fare Virgin America is set to take off front its San Francisco International Airport base this summer and expects to begin selling tickets within weeks, reports the San Francisco Chronicle. Inaugural service will be to JFK.

The final hurdle is to obtain safety permits from the FAA, which is expected soon.

The lengthy debate has centered over ownership and interest in what is to be an American-controlled airline. As ANN reported in March, Virgin significantly reconfigured its ownership and management structure to meet strict US citizenship tests under federal law.

"We worked very hard to address the Department's initial concerns, and are pleased that they have recognized our extensive work and good faith commitment to meet and exceed those requirements," said Virgin America CEO Fred Reid. "We plan to meet with our shareholders immediately to address the Department's proposed conditions."

As Aero-News reported, those conditions include the removal of Reid as CEO, due to what the DOT considered to be his overly-close relationships with foreign investors, including Virgin founder Sir Richard Branson.

As a foreign entity, Virgin Group can control no more than 25 percent of Virgin America's voting shares. The new airline must also report loans from Virgin Group to federal regulators.

Getting approval "has been a very tough ride," said Reid. "One of the indicators is that my bald spot has grown faster than the hole in the ozone."

Reid himself must step down within six months as a condition of approval. Although the former Delta CEO is an American citizen, because he was hired by British entrepreneur Richard Branson, concerns about Virgin America's autonomy were an issue.

Regulators said Reid's "longstanding association with foreign investors" raised concerns about possible overseas influence.

"I don't see any point in dwelling on that," Reid said. "I'll work day and night for a considerable period of time and will be there to see the baby leave the nest."

He declined to say whether the airline has identified a successor.

"We are jumping for joy that we can put our tracksuits on and get out in the stadium and compete in the grand meet of the airline business," Reid said.

Virgin has a staff of just over 200 and plans to hire 1,000 people a year for the next few years, according to spokesman Gareth Edmondson-Jones.

"Virgin America is the first airline to be based in San Francisco and in California," said Michael McCarron, SFO spokesman.

"To have a national airline based in San Francisco will mean several thousand jobs both directly and indirectly. There are all the administrative jobs that go with an airline, plus all the support jobs -- caterers, office suppliers, taxi drivers."

California job-training funds of $10 million helped attract the carrier to San Francisco in 2004.

Reid declined to give specifics on where the airline will fly, but said it will publish about six months of schedules, accounting for 1 million seats, once it receives the go-ahead to start selling tickets, which it expects to happen "within weeks."

Virgin, which reportedly has $177 million in financing, will fly Airbus A319s and A320s out of SFO's International Terminal.

FMI: www.virginamerica.com, www.dot.gov