Virgin Officially Rejected

Virgin America, Richard Branson's would-be American airline, has been trying to get the Department of Transportation's OK for a year. But federal law says domestic airlines must be controlled by Americans, and competitors have been bitching about Branson's Britishness. Today the DOT officially rejected the airline's application, saying Virgin would have to restructure or forget the idea. The San Francisco Chronicle points out that Branson wins either way: If he gives up, he'll increase the chances that Britain will keep American airlines out of European markets. If Branson doesn't get an American airline to play with, he does get to stave off competition at Heathrow and elsewhere. Not that there won't be losers:  

Here's what else American carriers are TKO'ing, just so that they can reduce their own competition and fully enjoy next year's expected 3-7 percent fare increase -- approximately 3,000 new jobs (1,600 of them in the Bay Area). Between $5 million and $10 million a year in Bay Area spending for Virgin America's headquarters. Some $24 million in state and local taxes. The consumer's convenience of having a low-cost carrier at San Francisco International Airport. The world's first environmentally-conscious carrier plan -- Virgin America wanted to tow its planes from the gate to the runway to save fuel, and it planned to buy from the new generation of quieter, more fuel-efficient planes. Our dear American carriers have so far resisted these planes because of the costs.

The well-traveled, much-missed Matt Welch tracked the transformation of Europe's skyways last year.

Comments

[Timothy]

This is akin to all that Wright Amendment nonsense that keeps Southwest tethered when flying out of Dallas - Love.

Bastard airlines will miss no opportunity to screw us.

[Lamar]

As it turns out, DOT prostitutes have been doing their work indoors for years.

[thoreau]

In college I took a few classes from a professor who absolutely loved studying the airline industry. I don't remember many specifics from his stories, just the general gist that the airlines were famous for seeking protection via regulators. This was perhaps the clearest illustration of the difference between pro-market and pro-business in all of my econ studies.

[dave b.]

This is akin to all that Wright Amendment nonsense that keeps Southwest tethered when flying out of Dallas - Love.

The Wright Amendment has been repealed.

[Cab]

When I first saw "Virgin Officially Rejected," I assumed it was a post about Dan T.'s weekend.

Ba Dum Bumpt (sorry Dan)

[Brian Courts]

Virgin screwed by Uncle (Sam).

[Mike Laursen]

Huzzah! Our forefathers fought a war to keep those damn, royalist Brits and their capital investments out of our country!

[Jonathan C. Hohensee]

Virigin told there is no room in the American Inn.

[tarran]

Remember, airlines are a natural monopoly and we need government intervention to prevent ensure competition. 😉

[JW]

Alright!! Less competition! Less downward pricing pressure! Major-carrier complacency! One less, very competitive company to fight for my travel dollars! Whoo-hoo!

USA! USA! USA!

[Chris S.]

Guys, come on, everyone knows that airline regulations have worked wonders for the airline industry. Bankruptcy, shitty service, high prices... Why stop now?

[R C Dean]

The Wright Amendment has been repealed.

And been replaced with a slightly less onerous market division that still hobbles Southwest long-haul flights.

[Andrew Ian Dodge]

Politicians covering their arses again. They no doubt don't want competition from Virgin after all look at the effect it had on transatlantic market. It drove down the cost, made the experience far better and made it far more pleasant to travel. I can see why they don't Virgin in the domestic market I truly do.