Virgin America Airline Seeks Approval to Fly

By Ted Jackovics, Tampa Tribune, Fla.

Feb. 23–TAMPA — Virgin America, the start-up, low-cost airline that drew its name and a minority investment share from billionaire entrepreneur Richard Branson, has Tampa and five other Florida cities in mind as potential destinations.

However, the company cannot get off the ground.

Virgin America filed for an operating certificate with the U.S. Department of Transportation in December, but the application remains mired in bureaucracy.

Potential competitors have challenged the application, asking whether Virgin America meets federal regulatory standards as an airline controlled by U.S. — rather than foreign — interests.

Virgin America listed Tampa International Airport, along with Miami, West Palm Beach, Fort Lauderdale, Orlando and Sarasota, among 38 airports nationwide in its Department of Transportation application.

Tampa is unlikely to be among the first cities Virgin America is expected to serve, even though there’s no nonstop competition between Tampa and San Francisco, the airline’s base.

“To be clear, this list includes cities we are considering for service,” Virgin America spokeswoman Stacy Geagan said. “It does not represent our actual proposal, which is confidential.”

Virgin America said in its federal filing that it would emphasize long-haul, domestic U.S. flights with Airbus A319 and A320 aircraft. San Francisco-to-New York would be the first route. Geagan said Virgin America’s aircraft have the range for coast-to-coast travel from Florida.

“I suspect that when they are up and running, we will see some Florida service,” said Louis Miller, director of Tampa International Airport. “We won’t be among their first cities, but we will push for service with Virgin America.

“They have put together some heavy hitters to run the airline,” Miller said, pointing to Chief Executive Officer Fred Reid, former president and chief operating officer of Delta Air Lines, and Chairman Donald Carty, who headed AMR Corp., parent of American Airlines.

The airline’s launch would be funded with $177.3 million in private equity and subordinated debt before operations began, unprecedented for a new U.S. airline, Virgin America said in its Department of Transportation application. In comparison, JetBlue began in 2000 with $130 million in capital funding.

Virgin America’s principal investor, VAI Partners LLC, is a U.S. investment company co-managed by officers of Black Canyon LLC of Los Angeles and Cyrus Capital Partners of New York and will contribute $88.9 million in start-up funding, the application stated.

Branson, of course, remains the most prominent name. He reportedly was worth $2 billion in 2004 from his interests in his British entertainment and travel conglomerate that spread to 170 companies, including international airline Virgin Atlantic. Branson for years has expressed interest in a domestic U.S. airline.

However, Virgin America points out that Branson is a minority investor and is not on the board.

“We are a U.S.-based, U.S.-owned and -controlled airline consistent with existing U.S. law,” Geagan said.

The Department of Transportation continues to review a challenge Continental Airlines filed, backed by American Airlines and Delta Air Lines, over whether Virgin America qualifies as a U.S. operation, agency spokesman Bill Mosley said Wednesday. The agency has no timetable for completing its review.

“We’ll be ready to fly as soon as we’re certified to do so, including 2006,” Geagan said.

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