Sir Richard Branson’s attempt to conquer the United States has yet to get off the ground. Travellers hoping that his proposed low-cost Virgin America airline would improve choice and competition and – perhaps – raise standards in the industry remain frustrated as US airline companies fight a bitter campaign to clip the wings of Branson’s latest venture before it has a chance to fly at all.
The Americans – led by Continental Airlines and American Airlines – argue that Virgin America should not be granted a licence to operate domestic routes in the US because it is not an American company. Consequently, the Department of Transportation has yet to grant Virgin America a licence to operate. Though the company had hoped to be flying this year, its launch has been pushed back to the first quarter of 2007 at the earliest.
The legacy carriers – Delta, Northwest, American, Continental, United and US Airways – have lost more than $40bn since the September 11 attacks on New York and Washington DC. Northwest and Delta are currently operating under bankruptcy protections, while both United and US Airways have also appeared in bankruptcy court. The established carriers have seen their market share sliced and diced by nimbler low-cost carriers.
The legacy carriers continue to struggle despite cutting nearly 40% of their workforce and 20% of their fleet. None has posted a profit since 2000, and a return to profitability has been made more difficult this summer by the high price of jet fuel, leading the airlines to impose a fuel surcharge on the price of tickets.
Though billed as a low-cost carrier, Virgin America insists that it will, according to Edmondson-Jones, “not just be a low-cost airline. It will be an innovative product that will stand out.” Virgin America plans to offer the largest seatback television screens with computer games and movies on a pay-per-play or view basis.
I wonder how much legacy air carriers spend on lobbying every year? I wonder how many Congresscritters they own outright?
Can they prevent them from flying just because they are not an American company?
Yeah, just let the bankrupt US airlines continue to stumble around in their zombielike state, rather than allow any foreign investment.
Eric –
Yes, US law prohibits or at least severely restricts all foreign airlines from flying domestic routes within the USA.
#3 US Law and International treaties.
So much for ‘Free Trade’…..
I guess if Branson wanted to build a highway from Britain through the US he would be ok…..
Yes, the USA’s stance on free trade is quite hypocritical when you consider their restrictions on ownership of airlines, and protection of the auto and steel industries and the agricultural sector.
Yet another great example of America’s “free market” and “capatalism” at work. God forbid a little bit of competition ever faces the huge American companies. Someday our society will realize we live in a global world and welcome free trade.
Why should I have to pay more to some incompetent, complacent, lazy company whose only interest is promoting the status quo, just because they happen to be closer to me?
Yet here we are, trying to use corn based E85 at a mere 1.3:1 efficiency when we could be getting cheap sugar cane ethanol from Brazil with a whopping 8:1 efficiency!
The definition of free trade according the US gouvernment is : We want in your markets… but keep out of ours.
Time to go back and re-regulate the airline industry.
Um, I don’t get your point, James Hill. It is “regulation” that is keeping Virgin OUT of the USA – how are MORE going to help?
10.
Frank, I think what he means is a government owned airline industry. Somethings just can’t make huge profits effectively, like transportation, energy, water treatment and still provide the tools for the citizenry to enjoy life and work without having to empty the rain barrels in the back yard.
Protectionism is necessary, otherwise your plane will be piloted by an 11-year-old boy from Bangladesh, and when you push the stewardess button (oops, flight attendant) you will be connected with a call center in India.
Actually, us Europeans deserve this type of behaviour… Look at how we protect our flight schools to have an idea. In the old days it was easy to go to the US to have a flight course, return to Europe and have our license converted. A European license would also be easily converted to FAA. Since the birth of JAA, FAA licenses became virtually wortheless to fly European aircraft. Talk about protectionism.
If Virgin can’t fly in America then perhaps the Euro guys could have some fun with barring American carriers from swooping about the European Skies of auld.
so… by their argument, tmobile is illegal because its owened by a comapny based outside of the USA?
Protectionism is necessary. Otherwise people with dark skin won’t stay poor and irrational fear will rule your ignorant little head.
We don’t fly domestic routes outside the U.S.. Virgin is entitled to fly or can get the permission to fly International routes to many cities here, just not city to city like an American airline.
I fly British Airways when I go to Europe, they fly from many cities here. I just can’t fly from Phoenix to Chicago on them.
We aren’t any worse in this protectionism than the Euro’s. France protects it’s farmers, cheesemakers and wine makers against even other E.U. members and the E.U. seems powerless to stop it. Microsoft is being gored to death by the E.U. so they will give up source code that will allow E.U. corps. the ability to kick Microsoft out the E.U. markets….all under the guise of *fines* for non-complience.
It’s the way of the trade world. Solution….but at home, close to home and save the world while doing it. Those carbon fumes from flying all those goodies from all over the world makes the ice caps melt faster.
Virgin America is American company, they are part of virgin group. Within 30 planes and virgin brand, it will quickly get mareket from SFO, one of expensive market in nation, it focus on businees center( JFK, BOS, IAD, ORD, ATL, MIA, DFW, LAS, DEN,SEA), not leisure traveller, so don’t expect fare drop significantly, but it is new and many new entertainment for business and young traveller.