Thu, Feb 12, 2009
Wants 'Assurance' Carrier Is Still US Majority-Owned
When small companies find themselves up against stiff
competition, they often work harder and increase ad budgets. When
big companies do battle, sometimes it's easier just to distract
your competitor and cost him money by convincing government
regulators he needs investigating.
Privately-held Virgin Airlines made an auspcious debut in 2007,
and has been slowly gaining ground against its more established
competitors. The airline's load factor was at 81.4 percent and
rising
in last year's third quarter, indicating its
increasing popularity... though the airline also lost a rather
humbling $175.4 million, with some routes costing twice or more
what Virgin makes on fares and ancillary charges.
Now, the Associated Press reports Alaska Airlines -- which goes
head-to-head with Virgin America in Seattle, San Francisco and Los
Angeles -- recently asked the US Department of Transportation to
reexamine whether the ownership structure of its new competitor
meets legal requirements for 75 percent ownership by US
stockholders.
Alaska says recent media reports bring the matter into question.
Keith Loveless, general counsel for Alaska Airlines, says "Only
through a careful and ongoing review of Virgin America's recent
actions conducted on the public record can the DOT and public be
assured that Virgin will remain a US citizen."
Virgin America was forced to make organizational changes, and
even purge execs considered too close to Sir Richard Branson,
before the DOT would issue its operating certificate. The company
says nothing has changed since, and calls Alaska's petition,
"meritless."
"Should our ownership structure change in the future, we will of
course notify the DOT in advance, so they can confirm our
continuing compliance."
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