Ownership issue plagues airline
By: Will Reisman
Examiner Staff Writer
February 11, 2009
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| Local carrier: Virgin America’s main hub is at San Francisco International Airport, and the airline employs 1,500 people in the Bay Area. It’s headquarters are in Burlingame. (Getty Images) |
SAN FRANCISCO — Virgin America is flying through some unfriendly skies.
A rival airline is demanding an investigation into whether the company should be allowed to operate within the United States.
Using San Francisco International Airport as its main hub and focusing on low-cost travel, Virgin has been a boon to the region since it began operating daily in August 2007, according to Dennis Conaghan of the San Francisco Chamber of Commerce.
The carrier, which employs 1,500 people in the Bay Area, made local headlines when it announced in 2004 that it would base its operations in Burlingame. Conaghan was among a group of local businessmen who worked hard to woo the company to the region. The airline is part of Virgin Group, which was founded by billionaire Richard Branson.
“I’m surprised these questions about their financial backing are being brought up again, because they spent months vetting that whole topic,” Conaghan said. “This makes me a little nervous. Virgin workers eat here, live here and pay taxes here. It’s a shame, because we have enough problems.”
The concern comes after Seattle-based Alaska Airlines on Tuesday filed a petition with the U.S. Department of Transportation, asking them to investigate whether Virgin complies with a law requiring U.S. carriers to be made up of 75 percent domestic ownership.
“Our main objective is to ensure that there a level playing field, and that DOT consistently enforces the law as it applies to all U.S. carriers,” Megan Lawrence, managing director of government and community relations at Alaska Airlines, said.
When asked if she would like to see Virgin’s carrier license revoked if its found guilty of the violations, Lawrence said, “I’m not going to comment on that. Our main interest is in transparency.”
Ownership problems have plagued Virgin in the past. In October 2006, while Virgin was in the midst of moving its operations to Burlingame, the Transportation Department issued a statement ordering the carrier to revise its corporate structure to comply with federal laws. Eventually, the airline found the right amount of domestic backers.
Bill Mosley, spokesman for the Transportation Department, would not comment specifically on the case or say how long the investigation would take. He also would not comment on specific sanctions the airline could face, but added, “An airline must obey with U.S. laws to hold a carrier license in the country.”
Virgin spokeswoman Abby Lunardini said the company is a “U.S. owned and controlled airline that is in full compliance with the law and all Department of Transportation regulations.”
A downturn in Virgin’s business could have widespread affects in the Bay Area.
Along with providing jobs, Virgin has helped strengthen the local economy by playing a vital role in marketing The City as a desired destination, according to Joe D’Alessandro, president of the San Francisco Convention and Visitors Bureau.
“Virgin is extremely important to us, because they’ve done a great job of creating demand for The City,” he said. “They’ve been critical here in opening up new gateways from across the country.”
The airline has also helped prop up SFO at a time when many U.S. airports are dealing with noticeable decreases in traffic. Based primarily on the growth of Virgin and Southwest Airlines, SFO’s air traffic expanded by 4.8 percent last year, according to spokesman Mike McCarron.
“We’ve clearly seen an uptick in our service since Virgin began operating,” he said. “Their continued growth is extremely important for us.”
Virgin America
Service launched at SFO: Aug. 8, 2007
Fleet: 28 Airbus A320 jets
Airports served: San Francisco, Los Angeles, San Diego, Las Vegas, Seattle, Washington and New York’s John F. Kennedy Airport; Virgin America plans to add service to Boston on Feb. 12
