[Paleo Conservative]

We need more domestic competition. As an example, the American Airlines of the world have kept out the Virgin Airlines from lowering fares. Why should that be? Virgin has tried to fly here for years. The US airlines have been price fixing for years.

Continental was opposed to Virgin America starting up so long as Continental was barred by treaty from flying to London Heathrow airport (LHR). Virgin America wasn't about offering low fairs; it was about funneling traffic to Virgin Atlantic to LHR. The new open skies treaty with the EU abolishes the unfair and anticompetitive Bermuda II treaty that allows only two flag carriers each for Britain and the US to fly between eight designated US cities and LHR. The US carriers were orginally Pan Am and TWA, but are now United and American. The current British carriers allowed are British Airways and Virgin Atlantic.

Not only were only two airlines per country allowed but several cities with major hubs were barred from having nonstop service to LHR in violation of Article 1, Section 9 9 of the US Constitution. In particular the Bermuda II Treaty signed in the 1970's bars nonstop flight between airports in Atlanta, Dallas, and Houston and LHR. This is discriminatory against an entire region of the US. Even though American Airlines has US rights to Heathrow, they are prohibited to fly DFW-LHR. Continental which has a hub in the New York City area (Newark(EWR)) and Delta at JFK are both prohibited from flying passengers to LHR from the New York area airports. Neither Delta nor Continental is allowed to fly from their headquarters hubs in Houston (IAH) or Atlanta (ATL) to LHR.

Under these circumstances, why should a new foreign controlled airline be allowed to skim off traffic from American carriers? Continental was arguing that under the law it wasn't just the percentage of foreign ownership (25%) that mattered but also the control of the board of directors. The Virgin America board was just a hand picked bunch of Richard Branson's puppets who were coordinating with Virgin Atlantic. The new not yet ratified open skies treaty will abolish all the LHR restrictions and allow any airline from the EU to serve any US airport from any EU airport or any US airline to serve any EU airport from any US airport. When the LHR restrictions are eliminated, I would have no problem with Virgin America starting up.

Article 1.
Section 9

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No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.

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If you want on or off my aerospace ping list, please contact me by Freep mail.

[SW6906]

I hope some of the earlier posters to this thread return and read our posts.....

[SW6906]

If people really want to understand how all this works, they can read up on Freedoms of the air. This is about granting more of those "freedoms" to foreign carriers - in return for granting them to our carriers.

Free and open markets are what conservatives are for, right?!!?

[Moose4]

Doesn’t Delta (and maybe others) do their London flights in and out of Gatwick, instead of Heathrow, for just this reason?

}:-)4

[cowtowney]

http://online.wsj.com/article/SB117952129472007891-search.html?KEYWORDS=virgin+airlines&COLLECTION=wsjie/6month

I missed this. Virgin got approval. Good. “U.S. regulations limit holdings by a foreign shareholder in a U.S. carrier to no more than 25% of its voting shares” Stupid antiquated law, designed to reduce competition.

Virgin America to Start Flying Midsummer
By PAULO PRADA
May 19, 2007; Page A2

Virgin America, the low-cost upstart airline founded by British billionaire Richard Branson, plans to begin flying midsummer, following a ruling Friday by the federal government that the carrier meets foreign-ownership rules.

In a blow to the airline’s initial strategy, however, the government denied a request by Virgin America that Frederick W. Reid, its chief executive officer, be allowed to remain at its helm. Because Mr. Reid was personally hired by Sir Richard to get the fledgling effort airborne, the government has argued that Mr. Reid remains “beholden” to foreign interests and must step down within six months.

After a 17-month struggle by Virgin America to obtain regulatory approval, the Department of Transportation in a ruling said the carrier had taken sufficient steps to allay government concerns over Virgin America’s ownership structure.

U.S. regulations limit holdings by a foreign shareholder in a U.S. carrier to no more than 25% of its voting shares. Though Sir Richard’s Virgin Group Ltd. owns just under that amount, competitor U.S. airlines successfully lobbied the government that Virgin America’s British investors held undue sway over its management and financing.