Maverick airline Virgin America told U.S. government regulators it’s prepared to overhaul its ownership, jettison its chief executive and possibly even change its name to gain clearance to fly — an ambition that has been blocked because of the startup’s ties to British entrepreneur Richard Branson.
With the list of concessions filed late Wednesday with the U.S. Department of Transportation, Burlingame-based Virgin America hopes to convince regulators it complies with U.S. laws capping foreign control of a U.S. airline at 25 percent.
In a tentative decision issued in late December, the Department of Transportation ruled Virgin America’s foreign interests exceeded the legal threshold while raising a series of concerns about Branson’s behind-the-scenes power.
Branson, a brash billionaire who sells everything from vodka to comics under the Virgin brand, dreamed up the low-cost U.S. airline and hired CEO Fred Reid before bringing aboard U.S. investors. The latter move caused regulators to wonder if Reid, a U.S. citizen, might turn out to be a Branson crony.
To address those concerns, Virgin America said it will dump Reid if asked by regulators, eliminate one of the three board seats previously awarded Branson’s Virgin Group, raise another $20 million from U.S. investors and place all of Virgin Group’s shares in a voting trust supervised by a U.S. trustee to be approved by the government.
The Department of Transportation also frowned upon the terms of the airline’s licensing agreement with the Virgin Group, arguing it could provide another lever to steer management’s decisions.
Virgin Group is now willing to revise the language of the licensing agreement, giving the proposed airline the leeway to adopt another name to get the startup’s fleet of planes off the ground.
“The importance of introducing Virgin America’s new innovative service and our multitude of consumer benefits are too large to let anything stand in our way,” the airline wrote in its filing.
If approved to fly, Virgin America plans to offer discount service between San Francisco and New York’s John F. Kennedy International Airport before expanding to other markets. Citing a study by the Campbell-Hill Group, Virgin America estimated U.S. travelers would save about $786 million annually if it’s allowed to fly.
Virgin America already employs 170 workers and has bought 33 aircraft, naming one of them “Jefferson Airplane” in tribute to the rock group that resonated with San Francisco’s hippie movement in the late 1960s.
Within five years, Virgin America hopes to create 5,000 U.S. jobs, including positions for some of the airline workers laid off amid the turmoil that saddled the industry with huge losses after the September 2001 terrorist attacks.
The U.S. aviation industry, for the most part, has opposed Virgin America’s entrance into the market, arguing a foreign-controlled operation could cause even more problems.
Having already won the backing of Gov. Arnold Schwarzenegger and San Francisco Mayor Gavin Newsom, Virgin America is now trying to drum up grass-roots support. The startup has unveiled a new Web site, www.letVAfly.com, urging consumers to sign an electronic petition asking the Department of Transportation to give the airline a chance to fly.