An order granting Virgin America Airlines the authority to begin operation as a U.S. carrier, after the company agreed to take steps needed to meet airline requirements has been issued by the…
An order granting Virgin America Airlines the authority to begin operation as a U.S. carrier, after the company agreed to take steps needed to meet airline requirements has been issued by the U.S. Department of Transportation. This order means that once Virgin America receives the necessary safety permits from the Federal Aviation Administration and implements the changes it has agreed to make, the company is cleared to begin flying.
The Department’s order found that Virgin America’s proposed changes to its management and financial structure will meet rigorous U.S. citizenship tests outlined under federal law.
“It’s tough to think of a company that has done as much to meet our standards for becoming a commercial airline,” said Secretary Peters. “Anyone who has doubts about the future of commercial aviation in this country should take a close look at one company’s efforts to compete.”
Virgin America submitted a substantial revision to its application after the Department’s initial tentative decision last year found that the company failed the citizenship test outlined in law. The Department found that since the airline revised its proposal and committed to meeting additional conditions set by the Department in March, the company now meets U.S. citizenship requirements. This includes providing advance notice to the Department should the carrier receive additional financing from non-U.S. investors.
The company also agreed to remove the Virgin Group’s veto power over certain contracts and expenditures, amend the company’s loan agreements with the Virgin Group, limit the tenure of its current CEO, restructure its board of directors to reduce the number of foreign representatives, and revise its trademark license to ensure the U.S. carrier can operate independently of U.K.-based Virgin Atlantic.
According to DOT, the Department’s Virgin America decision fully complies with current U.S. airline investment law and its application. Under the Federal Aviation Act, to be licensed as a U.S. airline, a company must show that it is actually controlled by U.S. citizens, that the president and two-thirds of the board of directors are U.S. citizens, and that at least 75 percent of the voting interest is owned and controlled by U.S. citizens.
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