Alaska Airlines has reopened the debate on whether Virgin America qualifies under foreign ownership and control restrictions on US domestic carriers, by petitioning the US Department of Transportation (DOT) to conduct a public inquiry into the San Francisco-based airline's citizenship status.
Citing recent media reports that it claims call into question Virgin's compliance with those ownership and control restrictions, Alaska Airlines has asked the DOT to investigate Virgin's current as well as prospective capital and governance structures and their effect on Virgin's US citizenship status.
US law requires air carriers to be US "citizens", qualification for which means that the outstanding voting interests of the air carrier must be at least 75%-owned by US citizens and the carrier must also be effectively controlled by US citizens.
Alaska's petition cites news reports suggesting that Virgin America, founded by the UK's Virgin Group, may no longer be a US citizen or is "in clear danger of losing its citizenship". These include reports of investors owning 75% of Virgin America's voting stock with imminent rights to sell their shares back to the foreign-owned Virgin Group and of new funding from investors, apparently including Virgin Group, under terms and conditions not revealed to the public.
"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," said Keith Loveless, general counsel for Alaska Airlines.
When it was set up, Virgin America's original structure was deemed non-compliant with US citizenship requirements and the company had to restructure before obtaining its initial certification. Alaska Airlines now argue that Virgin America's structure is not as it was upon certification.
"Since the issuance of their certificate, Virgin America's structure and operations have clearly changed; however, there is a lack of public information about those changes or how they may impact its citizenship status," Loveless claimed. "Alaska makes this request to ensure all US carriers are held to the same standard of compliance with US citizenship laws. Recent questions about Virgin's ownership status establish a compelling need for a transparent review of its continuing compliance with these laws."
Virgin America rebuffed Alaska's call, saying, “This is a meritless petition. We are a US owned and controlled airline that is in full compliance with the law and all Department of Transportation regulations. Nothing has changed in our ownership structure which was approved by the DOT. 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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