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Virgin America given permission to operate

From the Associated Press

Bay Area-based start-up airline Virgin America won final approval Friday to take to the skies in the United States.

Federal regulators approved the company’s revised plan to operate U.S.-based commercial flights after the company made numerous concessions, including replacing its chief executive, to allay concerns about the foreign ownership stake of Richard Branson’s London-based Virgin Group.

Virgin America, based in Burlingame, Calif., is expected to start service this summer with flights from San Francisco International Airport to John F. Kennedy International Airport in New York.

Within 12 months of getting underway, the airline plans to serve San Diego, Las Vegas, Los Angeles and Washington’s Dulles International Airport. The company is also considering numerous other cities for future service.

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The Transportation Department said Virgin’s revised plan, filed in January, was now in compliance with laws that limit foreign control of domestic air carriers.

That includes company ownership rules that cap foreign control of a U.S. airline at 25% of voting shares. Virgin also agreed to replace Chief Executive Fred Reid, the former Delta Air Lines Inc. president hired by British billionaire Branson, founder of London-based Virgin Atlantic Airways.

The DOT said it concluded that replacing Reid with a CEO not affiliated with Branson’s Virgin Group would allay worries about the airline’s independence.

In December, the DOT tentatively denied Virgin’s application, mainly because of ties to Branson, who has long said he wanted a U.S.-based airline.

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Major U.S. airlines, including AMR Corp.'s American Airlines, Delta and Continental Airlines Inc., unsuccessfully sought to prevent Virgin America from flying.


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