After conducting a thorough review, the U.S. Department of Transportation (DOT) has found that Virgin America remains a corporate U.S. citizen and remains under the actual control of U.S. citizens.
Under U.S. law, only airlines that meet the standards for U.S. citizenship may hold authority to operate as U.S. airlines and so the DOT’s finding means that Virgin America can continue to fly despite protests from other airlines over the past two years.
The DOT originally certified the airline’s citizenship status in August 2007. The carrier later notified the DOT of a significant potential shift in its shareholder makeup. As a result, deparment launched a review into whether Virgin America would continue to meet U.S. citizenship requirements. (Meanwhile, several companies and organizations including Continental Airlines, Alaska Airlines and aviation mechanics’ union the Aircraft Mechanics Fraternal Association called for the DOT to revoke Virgin America’s operating certificate.)
To meet the necessary citizenship standards to be allowed to operate as a U.S. airline, at least 75 per cent of an airline’s voting stock must be owned or controlled by U.S. citizens, the president and at least two-thirds of the board of directors and managing officers must be U.S. citizens, and the carrier must be under the actual control of U.S. citizens. The DOT says it examines a variety of factors to determine ‘actual control’ based on the totality of circumstances in each case.
Following discussions between the DOT and the airline, Virgin America agreed to make a number of changes to ensure that it would remain under the ownership and actual control of U.S. citizens. These changes include, among other things, provisions to ensure that new investments of capital from entities other than the Virgin Group ― a collection of the United Kingdom companies and/or citizens that own 25 per cent of the air carrier’s stock ― can and will be obtained. Virgin America also will add an additional U.S. citizen to its board, resulting in seven U.S.-citizen investor designees as voting members on the nine-member board.
The DOT has dismissed petitions by Alaska Airlines and the Aircraft Mechanics Fraternal Association for a public inquiry into Virgin America’s citizenship.
The department’s official letter to Virgin America may be obtained at ostpxweb.dot.gov/aviation. The DOT’s order dismissing the petitions may be found at www.regulations.gov, Dockets DOT-OST-2009-0037 and DOT-OST-2009-0047.