Tuesday, February 10, 2009

Alaska Airlines goes after Virgin America (again)

As we discussed in an earlier entry, Alaska Airlines previously told the DOT that they were not going to file their quarterly Form 41 passenger and revenue data unless Virgin America was compelled to do the same. Last week, Virgin America complied and filed their data since inception.

Today, Alaska Air fired another shot across the bow by asking the DOT to review Virgin America's status as a US Carrier. For those of you not aware, our fine government requires that all carriers based in the US to be 75% owned by US citizens and "effectively controlled" by US citizens. During Virgin America's start-up days, the incumbent US carriers convinced the DOT that Virgin America was, in fact, controlled by Sir Richard Branson, resulting in the replacement of original CEO Fred Reid.

Lets talk for a minute about the silliness of this law. This law, which has been on the books in various forms for eons, was created back when airlines were thought to be an integral part of our national defense system. Way back when, we didn't want some foreign power to come in and scoop up our airlines and move all of their planes to far-off lands.

However, the world has changed dramatically since those times. Now, the law's biggest effect is to constrain US carriers' in their ability to raise foreign capital. In these times especially, when capital is so dear, it is bone-headed that our government continues this form of regulation.

Heaven forbid that some great airline (say Singapore Airlines) would come in and buy a US carrier (say United) and provide funding that enabled United to actually have a decent product, employ thousands of Americans and run an operation akin to what Singapore Airlines, arguably the best airline in the world, is able to do. We allow foreign operators to own our airports (Chicago Midway for example), our railroads, buildings, roads and all manner of infrastructure. But not our precious airlines. Because our airlines are so good at what they do, right?

Alaska Airlines claims they are just looking to ensure all US carriers are held to the same standard. Fair enough, but what a silly standard in these times.

Virgin America provides Americans with a great product to fly on, employs thousands of Americans, buys loads of American products and pays plenty of American taxes - shouldn't that be enough?

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