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OST-2005-23307 - Virgin America - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger
http://www.virginamerica.com/
http://www.letvafly.com/
OST-2008-0107 - Form 41 Confidential Treatment Motion (Traffic and Financial)
Order 2009-1-17 - Virgin America Consent Order - Form 41 Reporting DelinquenciesOST-2009-0037 - Petition of Alaska Airlines - Citizenship
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Virgin America, Inc. OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger December 8, 2005 Application for a Certificate of Public Convenience and Necessity - Bookmarked New York City and the San Francisco Bay Area are just two of the major metropolitan areas that Virgin America proposes to serve. A new airline with Virgin America's nationwide scope will generate important economic benefits in every community it serves by creating new jobs and work for local vendors. In addition to employees hired for San Francisco Bay Area operations, the airline also will employ as many as several hundred additional persons at various airports across the United States. This application will show that Virgin America is a United States citizen that has sound financial backing, an experienced and capable management team, and a solid service proposal. These attributes will allow the airline not only to succeed, but to prosper, in today's competitive, domestic airline industry. With its sound business model and innovative product and service offering, Virgin America intends to contribute to the further evolution of the U.S. airline industry, an evolution first identified by the Department of Transportation in the 1996 study entitled "The Low Cost Service Revolution." More significantly, Virgin America intends to offer high-quality, value-priced service that will benefit the traveling public and contribute to the American economy by supporting the key domestic policy goals of increased airline competition and job creation. Accordingly, once Virgin America is found qualified to begin scheduled passenger service, it respectfully requests that the Department grant its application for a certificate so that it may commence service as expeditiously as possible. Virgin America has entered into agreements to acquire a fleet of brand-new Airbus A319 and A320 narrow-body aircraft. These aircraft will have significant advantages over the older aircraft used by many legacy carriers, as well as many of the aircraft relied on by other LCC's. They will offer outstanding long-range comfort and amenities, including the latest in technology and in-flight entertainment equipment. These aircraft will also offer enhanced fuel efficiency, high reliability, low maintenance requirements, and the opportunity for higher utilization (more time aloft). Counsel: DLA Piper Rudnick, John Mietus, 202-861-6466, john.mietus@dlapiper.com
December 13, 2005 Motion for Confidential Treatment - Bookmarked Virgin America Inc. respectfully moves the Department to withhold from public disclosure certain proprietary, commercially-sensitive, and confidential business and personal information. This information is being submitted in the form of Confidential Exhibits and Confidential Documents supporting Virgin America's certificate application in the above-captioned docket. Confidential Exhibits B through D contain the unredacted versions of Exhibits 15.1-15.3, 16, and 17 to the Application. Consistent with Department precedent and guidance to applicants submitting forecast operating results, Virgin America has redacted projections of, and assumptions relating to, its revenues, fares and operating metrics (except departures, average stage length, and block hours) in Exhibits 15.1-15.3 and 16. The applicant also has redacted monthly, projected balance sheets from Exhibit 17, leaving only the launch and forecast first-year balance sheets in the public exhibit consistent with Department requirements. The Confidential Exhibits contain these detailed financial and operational projections, which are private, commercial, and financial information of a type that is not usually disclosed to the public. Disclosure of this information would cause substantial harm to Virgin America’s competitive position. Counsel: DLA Piper Rudnick, John Mietus, 202-861-6466, john.mietus@dlapiper.com
December 16, 2005 Virgin America's application for authority to engage in interstate scheduled air transportation must be supplemented because the application raises substantial issues related to foreign control of the applicant, and Virgin America has not provided the information required by interested parties to evaluate and comment on those issues. Continental moves the Department to require Virgin America to supplement the record by submitting the documents and information described on the Request for Information and Documents attached to this motion. Without such additional evidence, Continental and other interested parties are unable to evaluate or comment fully on the application by Virgin America, its relationship to Virgin Atlantic Airways and other members of the Virgin Group and with their founder, Sir Richard Branson, and other foreign interests. Accordingly, the Department should also suspend the procedural dates in this proceeding pending Virgin America's submission of the additional necessary information and documents and access is provided to those documents and the documents Virgin America has previously submitted under seal. Counsel: Continental and Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
December 19, 2005 Answer of American Airlines in Support of Motion of Continental to Require More Information American hereby answers in support of the motion filed on December 16, 2005 by Continental Airlines seeking to suspend further procedures on the application of Virgin America and to require Virgin America to produce additional documents and information. Absent suspension of further procedures, answers to Virgin America's application would be due within 21 days, or on December 29, 2005. Interested parties should not be required to file answers in the absence of additional documents and evidence that are so clearly necessary to test the proposition advanced by Virgin America that it qualifies as a US citizen under existing Department policy and precedent. In the event that the Department requires additional time to rule on the specific details of Continental's request for documents and information, the Department should first issue an order - prior to the end of this week - suspending the December 29 answer date, and later issue a separate order establishing the precise scope of the additional evidence that Virgin America should be required to produce. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
December 19, 2005 Answer of Air Line Pilots Association in Support of Motion of Continental Air Line Pilots Association supports the motion of Continental Airlines, Inc. to require Virgin America to provide additional documents and information as described in the Request for Information and Documents that is attached to the motion. The materials already in the public docket clearly indicate that foreign citizens played a dominant role in the establishment of Virgin America, and will continue to play a highly significant role in its management. In these circumstances, a detailed analysis of the airline's complex financial and management structure will be necessary to determine just where "actual control" will ultimately lie. Such an analysis will require a dose examination of the information and documents sought by Continental, as well as the voluminous information that Virgin America has already filed with its Application and the subsequent Motion for Confidential Treatment that it filed December 13. Continental's information requests are self-explanatory and are fully justified in its motion. ALPA would only add that information request 1(f), which seeks production of "[a]ll contracts, agreements, or other arrangement...between the executive officers of one entity using the 'Virgin' name or brand and any other entity using the 'Virgin' name or brand," should be construed or revised to encompass agreements with or between "persons" (as defined in the "General Instructions" who are in any way associated with any "entity using the 'Virgin' name or brand.") ALPA also strongly supports Continental's request to suspend all procedural dates until all relevant information and documents required of Virgin America have been received, and interested parties have had an adequate opportunity to review them. Virgin America has already submitted over 1000 pages of documents in support of its application, and the additional information sought by Continental will likely also be voluminous. It is essential that all interested parties be given adequate time to review these materials before responding to the pending application. Counsel: ALPA, Jerry Anker, 202-797-4086
December 20, 2005 Answer of Delta Air Lines in Support of Motion of Continental Delta Air lines, Inc. supports the Motion of Continental Airlines, Inc. requesting that the Department of Transportation suspend further procedures on the application of Virgin America Inc. and direct production of additional information and documents. The Applicant's bare-bones application raises more questions than answers on the key issue of whether "actual control" of the applicant rests with U.S. citizens as required by law. Continental's motion urges the Department to require the Applicant to supplement its application with additional information and documents. Delta supports Continental's request and urges that the list of information and documents be expanded as discussed below. Suspension of further procedures pending submission in the Docket of and access by interested parties to the additional information and documents requested by Continental and Delta is critically necessary to afford interested parties the ability to comment meaningfully on the application. The Department should expedite the issuance of a notice suspending the procedural dates in this proceeding. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
December 21, 2005 Answer of the Allied Pilots Association in Support of Motion of Continental The Allied Pilots Association supports the motion of Continental Airlines, Inc., to require Virgin America, Inc. to provide additional documents and information and to suspend further proceedings on the application of Virgin America. The materials already in the public docket indicate that foreign citizens played a dominate role in the establishment of Virgin America, and will continue to play a highly significant role in its management. APA further supports the additional information requests submitted by the Air Line Pilots Association and Delta Air Lines, Inc., as essential to allow the interested parties a meaningful opportunity to analyze and answer Virgin America's application. The Department's well established fact intensive inquiry requires the information requested by Continental and this additional information in order to determine whether a foreign person or entity could exercise "actual control" over a U.S. carrier. APA also supports Continental's request for a suspension of further procedures for the reasons set forth in the Answers by ALPA, Delta and American Airlines, Inc. Absent suspension, answers to Virgin America's application are due within 21 days, or on December 29, 2005. Answers to Continental's motion are due by December 28, 2005. Interested parties can make no meaningful answers within that time frame and without the evidence needed to test the proposition advanced by Virgin America that it qualifies as a U.S. citizen under the existing Department precedent. Counsel: James & Hoffman, Edgar James
December 21, 2005 Answer of the Transportation Trades Department, AFL-CIO in Support of the Motion of Continental The Transportation Trades Department, AFL-CIO hereby answers in support of the motion filed by Continental Airlines and in opposition to the application as submitted by Virgin America for a certificate of public convenience and necessity to engage in interstate air transportation. Virgin America asserts in its application that its ownership and management structure comply with current U.S. citizenship and control requirements and asks the Department to use simplified procedures in reviewing its application so that it may commence service as early as possible in 2006. Not withstanding this assertion, there are significant issues regarding foreign control and ownership of Virgin America that are not fully explained nor addressed in the application. TTD has closely monitored the progress that Sir Richard Branson and his Virgin Group (comprised of foreign companies including Virgin Atlantic Airways) have made in creating Virgin America. It is clear that significant foreign involvement has already gone into designing Virgin America and preparing it to operate as a U.S. carrier. There is thus a fundamental question as to whether this involvement will jeopardize U.S. actual control and the degree to which this involvement will continue if the carrier is granted a certificate. We would note that the U.S. citizens ostensibly providing the financing for this proposed carrier have limited experience in the aviation industry and the developing carrier may rely on its foreign investors and managers for guidance and expertise. It is incumbent on the Department to ensure that the role of foreign interests and the proposed carrier's complicated financing and management structure do not run afoul of the current rules requiring U.S. ownership and actual control. We respectfully submit that this determination cannot be reasonably made based on the application as submitted and in the time frame proposed by Virgin America. For these reasons, we support the motion of Continental that Virgin America produce additional documents and information that speak to who will actually control this carrier. We also support their request to suspend all procedural dates until the above information and documents have been received and stakeholders, including aviation workers and their unions, have had an opportunity to review and analyze these submissions and the entire docket. Counsel: Transportation Trades Department, Edward Wytkind, 202-628-9262
December 22, 2005 Answer of Virgin America to Motion of Continental Airlines Virgin America Inc. respectfully requests that the Department grant counsel and outside experts for Continental Airlines, American Airlines, Delta Air Lines, the Air Line Pilots Association, the Allied Pilots Association, the Transportation Trades Department, AFL-CIO, and other interested parties access to the Confidential Exhibits and Documents that Applicant submitted on December 13, 2005. As Virgin America noted in its Motion for Confidential Treatment of that date, it seeks a timely review of its December 8, 2005 Application in accordance with the Department's normal process and procedural guidelines and would consent to allow such access to support that timely review. Access to the confidential materials will fully address issues raised by Continental's December 16, 2005 Motion, and the answers to that Motion filed to date by other parties. Virgin America opposes Continental's Motion (and it replies in opposition to the answers to that motion filed by the supporters named above) in all other respects. The Answer to Motion public interest and long-standing Department practice require this proceeding to move forward in an orderly fashion, with interested parties first filing formal Answers to the Application. The Application itself is a comprehensive one, and interested parties have had ample time to form their positions on it. Accordingly, Applicant requests that the normal, orderly Department process continue and that all parties be required to file Answers to the Application no later than December 29, 2005 as provided by regulation. However, Virgin America recognizes that some additional time may be required to review some of the confidential materials that are in the sealed docket. Thus, while not required by regulation, Applicant would not object to opponents and other interested parties being allowed to amend their initial Answers within 14 days of the Department granting access to this additional, confidential material. Counsel: DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
Order 2005-12-13 Issued and Served December 23, 2005 We defer the 21-day deadline for the filing of answers set forth in 14 CFR Part 302.204 until 14 days after the Department has ruled on the Continental Airlines, Inc. Motion. Replies to answers shall be filed within seven business days after the due date of the answer. We grant immediate interim access to all documents covered by Virgin America Inc.’s Rule 12 Motion to counsel and outside experts for interested parties who file appropriate affidavits with the Department in advance. Moreover, at the Dockets facility, Parties will be permitted to make copies of the exhibits for use by persons who have filed confidentiality affidavits, consistent with conditions agreed to by Virgin America Inc. We also grant interim access to any subsequent materials that may be filed in this case under a Rule I2 Motion to counsel and outside experts for interested parties who file appropriate affidavits with the Department in advance, unless the party filing the Motion objects. We expect all affidavits to state, at a minimum, that (1) the affiant is counsel for an interested party or an outside independent expert providing services to such a party; (2) the affiant will use the information only for the purpose of participating in this proceeding; and (3) the affiant will disclose such information only to other persons who have filed a valid affidavit in Docket OST-2005-23307. Affiants and interested parties must understand and agree that any pleading or other filing that includes or discusses information contained in the covered documents must itself be accompanied by a Rule 12 Motion requesting confidential treatment. By: Michael Reynolds
December 22, 2005 Answer of Air Line Pilots Association to Motion for Confidential Treatment Virgin America Inc. has requested that the Department of Transportation grant confidential treatment to certain information submitted in connection with its application for a certificate of public convenience and necessity and that access to this information be limited to counsel and outside experts for interested parties. Virgin has also informed the Department that it has redacted portions of two of the documents for which confidential treatment has been requested. The Air Line Pilots Association does not take a position at this time on whether particular submitted information should be afforded confidential treatment under Rule 12. ALPA, requests, however, that its own in-house experts who sign appropriate confidentiality affidavits be allowed access to any information for which confidential treatment is sought. ALPA also asks that the Department review the redacted materials camera to determine whether they are relevant to Virgin's fitness. Counsel: ALPA, Jerry Anker, 202-797-4086, jerry.anker@alpa.org
December 23, 2005 Reply of Continental Airlines and Request for Leave to File an Otherwise Unauthorized Document ALPA, American, APA, Delta, and AFL-CIO TTD all support Continental's motion for additional evidence and suspension of proceedings on Virgin America's application, and only Virgin America opposes the motion. The Department should reject Virgin America's absurd position that interested parties should be required to answer its holiday season application either twice or without adequate time to review voluminous, supposedly significant and currently unavailable confidential documents that Virgin America waited almost a week to file after submitting its application. Instead, the Department should suspend further proceedings on the application before the holiday break and grant access promptly to the confidential documents on file. In due course, the Department should issue a request for additional evidence as recommended by Continental, AFL-CIO TTD, ALPA, APA, and Delta, and be prepared to supplement the request as warranted after interested parties have had an opportunity to review the confidential documents. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
December 27, 2005 Motion of Virgin America for Leave to File and Reply to Answer of Air Line Pilots Association Virgin America submitted the Confidential Documents voluntarily and with a non-confidential explanation of the redacted content, and ALPAs Answer was made without the benefit of access to those Confidential Documents. Virgin America submits that the confidential material as redacted is sufficient for the purposes of this proceeding without the addition of limited, highly- sensitive, redacted material. Counsel: DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
December 28, 2005 Answer of United Air Lines to Motion of Continental United concurs with Continental that more information is required before a decision can be reached on the degree of VAm's ownership and control. Because there are, in this case, issues of the degree of control of VAm by U.K. nationals, including Virgin Atlantic Airways Ltd., these issues take on added importance. As noted by American Airlines, Inc. in its Answer dated December 19, 2005, the Department has not previously been willing to approve even the type of U.S. carrier ownership structure already asserted by VAm in its application unless an open skies agreement is in place with the homeland of the foreign investors who hold a substantial percentage of the U.S. carrier's stock, citing the case of Northwest/Wings, Order 91-1-41. These pending matters would seem to suggest that VAm might well benefit from having its application considered under the more flexible ownership/control standards of the Department's NPRM rather than under current standards. This also assumes the U.K, acceptance of the open skies terms in the pending US/EU agreement. While VAm has insisted that it qualifies as a U.S. citizen under present interpretations, that remains to be seen based on information to be filed in response to Continental's motion. United urges the Department to consider carefully the requests for additional information made by Continental and others. The Department should direct VAm to file such additional information as necessary for the Department to determine the citizenship of those who own and control VAm. Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com December 29, 2005 The Port Authority of New York and New Jersey hereby submits this Answer in support of the Application of Virgin America, Inc. for a Certificate of Public Convenience and Necessity for authorization to begin scheduled interstate service. It is expected that after Virgin America is issued a Certificate of Public Convenience and Necessity, Virgin America will offer service to and from one or more of the three major New York/New Jersey Metropolitan Area airport, John F. Kennedy, LaGuardia Airport, and Newark Liberty International Airport, all of which are operated by the Port Authority. By: PANYNJ, Matthew Cornelius, 212-435-3793, mcorneli@panynj.gov
January 6, 2006 Motion of Air Gumbo, Inc. to Support Application of Virgin America, Inc. Air Gumbo, Inc., requests that the application of Virgin America, Inc., to the Department of Transportation for a Certificate of Public Convenience and Necessity authorizing it to engage in interstate scheduled air transportation of persons, property, and mail, be processed by a simplified, non-hearing expedited procedure pursuant to Subpart Q of the Department’s Procedural Regulations, upon a successful determination by the Department that Virgin America, Inc., has meet the U.S. citizen requirement. As a starting-up airline our self, Air Gumbo, Inc. believes that the grant of the requested authority would be consistent with the competitive spirit of the Department, as well as the Department and Congressional policy as exemplified by the signing of The Wendell H. Ford Aviation Investment and Reform Act on April 5, 2000. AIR GUMBO, INC. respectfully requests that the Department grant Virgin America, Inc., an expedited process and grant any other relief as it may find to be in the public interest. Counsel: Air Gumbo, Ralston Champagnie, 337-781-0034, ralston@airgumbo.com
January 11, 2006 Motion of Virgin America to Enforce Order 2005-12-13 On January 5-6, 2006, three individuals filed confidentiality affidavits that do not comply with the Access Order because they do not state that the individual is acting as counsel or an outside, independent expert. Virgin America urges the Department to review, for compliance with the Access Order, all affidavits submitted by individuals seeking access to the Confidential Materials. It further moves the Department to immediately suspend the access of Mr. Edward Wytkind to the Confidential Materials." Mr. Wytkind is the President of the Transportation Trades Department, AFL-CIO, which formally opposed Virgin Americas application on December 21, 2005. His affidavit does not state that he is counsel for TTD, nor even that he is a lawyer; Virgin America understands he is not. Thus, he is not within the classes of individuals authorized by the Access Order, and longstanding Department practice, to review and use confidential materials in the context of a Department proceeding. The affidavits of United Airlines' Conor McAuliffe and Julie Oettinger also do not comply with the Access Order, as their affidavits do not state that they act as counsel for United Airlines. Mr. McAuliffc's affidavit does indicate that he is a member of the Illinois bar, and Virgin America understands that Ms. Oettinger also is licensed to practice law. Without conceding that these individuals are acting specifically as counsel to United in this proceeding, Virgin America does not oppose their continued access due to their status as attorneys and the other representations in their affidavits. Counsel: DLA Piper Rudnick, John Mietus, 202-861-6466, john.mietus@dlapiper.com
January 17, 2006 In a Motion dated January 11, 2006 Virgin America asks the Department to deny access of Confidential Materials to Edward Wytkind, President of TTD. For reasons stated below, allowing Mr. Wytkind access to these materials is necessary for TTD to fully evaluate this application, is not inconsistent with the Department's purpose in issuing Order 2005-12-13, and will not cause Virgin America undue harm. Virgin's motion should therefore be denied. While it is correct that Mr. Wytkind is not a lawyer, he is required by his position as President to oversee and direct our policy and regulatory activities and signs off on positions taken by TTD. This would include our ultimate position taken in this proceeding. Counsel: TTD, Larry Willis, 202-628-9262, larryw@ttd.org
Order 2006-1-21 Issued and Served January 26, 2006 Order on Requests for Expanded Access and In Camera Review of Documents By this Order, the Department orders an in camera review of certain documents and information that the applicant either redacted or omitted from its confidential submission filed on December 13, 2005. The Department will review the documents and information and place a Notice in the docket should we determine that any materials are deemed relevant to our determinations in this matter. If we find that the information is relevant, we will require that the information be filed in the record. Conversely, if we initially determine that the reviewed materials are not relevant to our determination, we will not require the filing of the materials in the docket, while reserving our right subsequently to determine, at any time in view of further analysis, that the previously reviewed information is relevant, and therefore the applicant must submit it in the docket. The applicant then may seek confidential treatment of this material under Rule 12. By: Michael Reynolds
February 10, 2006 Virgin America's application has been complete at least since its supplemental filing on December 13, 2005. Indeed, in first addressing the Motion of Continental Airlines, Inc. to stay this proceeding, the Department "recognize[d] the efforts made by the applicant to submit, together with their application, information and supporting documentation relevant to analysis of an air carrier fitness application." Virgin America's Confidential Materials have been accessible to counsel and outside experts for interested parties since that order was issued over six weeks ago; thus, Virgin America respectfully believes it is appropriate for the Department to set a date for interested parties to answer the application and for Virgin America to reply. Counsel: DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
February 21, 2006 Far from being complete, Virgin America's application contains huge gaps relating to both ownership and control of the applicant. Before the Department can determine that the application is complete the record must be supplemented by the additional information and data requested by Delta, Continental and others. Virgin America's application and its Confidential Material raise more questions than answers about the critical issues of whether or not "actual control" of Virgin America resides with non‑U.S. citizens. Also unclear on the basis of the current incomplete record the extent to which foreign entities own the applicant. As Delta noted in its December 20, 2005 Answer, Virgin America's application and the exhibits attached thereto confusingly describe a complex web of debt and equity investments that, when closely examined, suggest that Virgin America had been, currently is and will in the future be funded and controlled principally by foreign entities. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999
February 22, 2006 Answer of Air Line Pilots Association to the Motion of Virgin America to set Answer Date Virgin America has asked the Department to establish a date for interested parties to file answers to its application for a certificate of public convenience and necessity. DOT has already done what Virgin is requesting. In Order 2005-12-13 the Department decided that answers to Virgin's application would be due 14 days after the Department rules on Continental Airlines' December 16, 2005 motion requesting that the Department require Virgin to supplement the record by filing certain additional information. That information, and the information requested in Continental's February 13, 2006 supplement to its earlier motion, is clearly necessary for the parties and the Department to evaluate whether Virgin meets the fitness and citizenship standards of the federal aviation statutes. ALPA believes, indeed, that the 14-day period established by the Department is excessively abbreviated given the quantity of additional material likely to be required by the Department. ALPA also believes that the number of days for filing answers should run not from when the Department rules on Continental's motion but from the date the Department determines that Virgin has supplied all the required information. For these reasons, to the extent that Virgin is asking for a date to be set before DOT rules on Continental's motion (as supplemented), the Applicant's motion should be denied. Counsel: ALPA, Jerry Anker, 202-797-4086, jerry.anker@alpa.org
February 22, 2006 Answer of American Airlines to Motion of Virgin America Virgin America's application is far from complete, and its motion should be denied. Virgin America asserts that Continental's "primary arguments" for deferring the answer date had to do with the "holiday season" in December. To the contrary, the primary focus of Continental's motion of December 16 - and of American, Delta, and others supporting Continental's motion - is that the Department should order Virgin America to submit far more information in connection with its application. There is no set time limit on the Department's decisional process to deem an application complete. For example, in the recent SkyTeam antitrust immunity docket (OST-2004-19214), the application was initially submitted on September 24, 2004 and not deemed complete until scheduling Order 2005-6-1 was issued on June 3, 2005. Careful deliberation by the Department on the information to be required from Virgin America is likewise warranted here, particularly in light of ongoing developments with respect to the NPRM on actual control pending in OST-2003-15759 and a potential U.S.-EU agreement that could result in U.S.-U.K. open skies. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
February 22, 2006 Answer of Continental Airlines Virgin America's audacity in asking the Department to expedite action on Virgin America's application when Virgin America has failed to provide any of the additional information requested by Continental and other parties, including documents, information and agreements. Perhaps most outrageous is Virgin America's failure to even mention its new chairman, much less provide information about its new chairman, who is already heavily involved in at least two other airlines that are potential competitors of Virgin America. Because of the extraordinary foreign control issues raised by Virgin America's application and the exceptionally complex ownership structure established to mask that control, the Department must require Virgin America to submit the additional documents already requested and take the time necessary to scrutinize Virgin America's governance and control rather than rushing to judgment as if this case were a simple new entrant fitness proceeding. Continental urges the Department to deny Virgin America's motion to establish a new answer date and to grant the requests by Continental and other parties for additional information and documents. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
February 22, 2006 While Virgin America disregards the due process reasons for the continued suspension of the answer, they are paramount. The key issue here is whether, as Virgin America contends, the applicant meets the Department's U.S. citizenship standard and, more particularly, whether Virgin America is under the actual control of U.S. citizens. The Department's regulations require that interested parties, including existing U.S. airlines and labor unions, have full information in order to present informed comments with respect to this proposition. Without such information, interested parties will be denied a meaningful opportunity to analyze and comment on the application and the Department will be denied the benefit of such comments in reaching its determination. Counsel: Northwest, Megan Rae Rosia, 202-842-3193
February 23, 2006 American Airlines, Inc. hereby answers in support of the supplemental motion submitted on February 13, 2006 by Continental Airlines, Inc. requesting that the Department order Virgin America, Inc. to provide additional information and documents in connection with its application in this docket for a certificate as a United States citizen air carrier. Virgin America's claim of U.S. citizenship rests on an exceedingly complex web of transactions and agreements involving multiple individuals, corporations, partnerships, investors, and other entities of various nationalities - a web that cannot be untangled absent additional information. But what is crystal clear is that Virgin America was conceived, designed, equipped, staffed, and funded by Sir Richard Branson, a non-U.S. citizen, and the Virgin Group of companies, likewise non-U.S. citizens. Virgin America's operations are subject to a Virgin Group branding agreement and to plans that were obviously adopted long in advance of the initial closing in November 2005 purportedly shifting control of Virgin America to hedge fund investors. In these unique circumstances, as well as the fact that the U.K. is a non-open skies country, the Department should not proceed with Virgin America's application until additional information and documents are submitted. The Department should grant Continental's initial motion of December 16 and its supplemental motion of February 13, and should issue a ruling under Order 2006-1-21, January 26, 2006 with respect to in camera review of redacted and withheld documents. A procedural schedule should not be established until Virgin American has complied with all evidentiary requirements. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
February 23, 2006 Continental's supplement to its previous motion requests that the Department require Virgin America to submit additional information and documents to fill in the many gaps in the record which became apparent from the confidential documents. As Continental correctly points out, the confidential documents do not resolve the key issues of ownership and control, but rather raise even more questions. The additional information and documents requested by Continental in its proposed supplemental evidence request are required to develop an adequate record concerning which entities actually own the Applicant and whether the Virgin Group will continue to have the ability to exercise "actual control" over Virgin America. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
February 23, 2006 Northwest Airlines, Inc. hereby answers in support of the Supplement of Continental Airlines, Inc. filed on February 13, 2006, asking the Department to require Virgin America, Inc. to submit additional documents and information related to its application. Northwest has reviewed the confidential documents previously submitted by Virgin America, and Northwest agrees that the current record raises significant questions about the structure and foreign control (past, present and future) of Virgin America. More information, as requested by Continental and others must be provided by Virgin America before the Department requires interested parties to file answers to the application. Counsel: Northwest, Megan Rosia, 202-842-3193, megan.rosia@nwa.com
March 3, 2006 Supplement No. 1 to Application - Bookmarked Virgin America Inc. respectfully supplements its application, filed December 8, 2005 in the above-captioned docket, for a certificate of public convenience and necessity. As the Department is now aware, Donald J. Carty recently was named Chairman of Virgin Americas Board. Accordingly, Virgin America would like to provide additional updates on the information contained in its application.
Counsel: DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
March 3, 2006 Motion for Confidential Treatment Under Rule 12 Virgin America Inc. respectfully moves the Department to withhold from public disclosure certain proprietary, commercially-sensitive, and confidential business and personal information. This information is being submitted in the form of a revised Confidential Exhibit and Confidential Documents supporting Virgin America's certificate application in the above-captioned docket. On December 13, 2005 Virgin America submitted Confidential Exhibits and also submitted voluntarily, as Confidential Documents, copies of substantially all the transaction documents associated with Virgin America's initial capitalization on November 21, 2005. By Order 2005-12-13 dated December 23, 2005, the Department granted those Confidential Exhibits and Documents interim confidential treatment and made them available to counsel and outside experts for interested parties. The recent appointment of Donald J. Carty as Chair of the Virgin America Board of Directors, and his investment in the airline, has led to a second set of transaction documents that Virgin America is filing with this Motion. These sensitive business documents are relevant to the Department's review of Virgin America's U.S. citizenship, but their public disclosure would cause substantial harm to Virgin America's competitive position by disclosing details of its financing. Counsel: DLA Piper Rudnick, John Mietus, 202-861-6466, john.mietus@dlapiper.com
March 1, 2006 Support of Miami-Dade Aviation Department The Miami-Dade Aviation Department, operator of Miami International Airport, fully encourages the U.S. Department of Transportation to grant Virgin America authority to commence domestic air operations within the United States. By: Jose Abreu
April 4, 2006 Public Supplement No. 2 of Continental Airlines to Motion for Additional Information and Documents - Bookmarked Almost four months after filing its initial application and two months after urging the Department, to expedite action on its then-incomplete application, Virgin America still has not provided the additional information requested by Continental and other parties necessary to evaluate the extraordinary foreign control issues raised by the application or satisfied basic information requirements applicable to new entrants. Continental's review of Virgin America's Supplement No. 1 and the additional confidential documents submitted by Virgin America on March 3, 2006 confirms that the record still remains woefully incomplete. Not only do the substantial questions previously raised by Continental and other parties (including AFL-CIO TTD, ALPA, American, APA, and Delta) about the applicant's exceptionally complex ownership structure and future control and the bona fides and independence of its U.S. investors remain unanswered, but Virgin America's March 3 submissions raise additional questions that require explanation before other parties are able to respond to the application. Accordingly, Continental renews its requests of December 16, 2005, February 13, 2006 and February 22, 2006 for additional information and documents from Virgin America and supplements those requests with additional requests based on the March 3 submissions. In view of the unprecedented foreign control issues raised by Virgin America's application and Virgin America's continuing failure to clarify the complex ownership structure established to mask that control or demonstrate that its U.S. investors should be considered owners of equity, the Department should, at a minimum, require Virgin America to submit the additional documents and information previously requested as well as the evidence outlined in this Supplement No. 2 and on Appendix A to this Supplement No. 2 before setting an answer date for Virgin America's pending application. Counsel: Continental and Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
April 4, 2006 Motion of Continental Airlines for Confidential Treatment Pursuant to Rule 12 of the Department's Rules of Practice, Continental moves to withhold from public disclosure the confidential version of its second supplement to its motion for additional information and documents from Virgin America submitted to the Department today. Continental's confidential Supplement No. 2 contains information from documents for which access has been limited by the Department's confidential treatment rules and Order 2005-12-13. Accordingly, Continental asks for confidential treatment of the confidential version of its supplement submitted today to the Department. Continental's confidential supplement is being served only on counsel for the applicants and other counsel who have submitted valid confidentiality affidavits in this docket. Counsel: Continental and Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
Order 2006-4-15 Issued and Served April 13, 2006 Order Requesting Additional Information - Bookmarked The Department has reviewed Virgin America’s application, including the confidential record and the supplemental information filed on March 3, 2006. Based on our initial review of this material, we have determined that additional and/or clarifying information is needed before we can make a fitness determination in this matter. Therefore, we direct Virgin America to file the supplementary material identified in the Information Request attached as Appendix A to this Order. Further, in reviewing Continental’s motions requesting additional information, we have concluded that only some of the questions are relevant to our fitness determination. In its December 13, 2005, confidential submission, the applicant redacted certain material that it deemed not relevant to the Department’s fitness determination. As previously noted, we directed Virgin America to submit a copy of the unredacted documents and information to the Department for an in camera review. Based on our in camera review, we find that certain of these materials are relevant to our fitness determination. Therefore, we direct Virgin America to file those documents identified in Appendix B of this Order in the record of this case. By: Michael Reynolds
April 13, 2006 Although the Department today issued Order 2006-4-15 directing the applicant to submit additional information, that Order did not mention much less address Continental's Supplement No. 2 filed on April 4, 2006. Continental is correct in asserting that Virgin America's Confidential Documents filed on March 3, 2006 fail to resolve the large gaps in the record concerning, and indeed raise even more questions about, the central issue in this proceeding as to whether non-U.S. citizens are in "actual control" of the applicant. Also unclear on the basis of the current incomplete record is the extent to which foreign entities own the applicant. Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999
April 24, 2006 Petition of Virgin America for Partial Reconsideration of Order 2006-4-15 Virgin undertook steps to bring the concept of a new, low‑fare, U.S. air carrier to reality. Virgin was fully cognizant of the fact that under applicable U.S. federal aviation law, U.S. investors must hold actual and constructive control of any domestic air carrier. As a result, it solicited, directly and through financial advisors and representatives, interested U.S. investors who would be willing to participate in and fund the project and exercise actual control over the airline. The current members of VAI Partners LLC were among the U.S. investors solicited. Virgin America has already provided the Department and other parties with an extensive record of materials. In its view, the imminent filing of Supplement No. 2 and the stipulations proposed above will address the issues underlying Order 2006-4-15 and allow this proceeding to move forward. Only those airlines who fear competition from a well‑capitalized, low‑cost, high quality U.S. airline have any reason to prolong this proceeding. Counsel: Virgin America and DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
April 25, 2006 Supplement No. 2 of Virgin America to Application - Bookmarked Virgin America Inc. respectfully supplements its December 8, 2005 application for a certificate of public convenience and necessity by responding to the Department's requests in Order 2006-4‑15. Order 2006-4-15 is the Departments first request for additional information in this matter. Given the extraordinary efforts that certain legacy airlines (future competitors of Virgin America) have taken to slow the Department's processing and burden the record with irrelevant information, Virgin America appreciates the opportunity to provide the Department with answers to its questions about the Virgin America application. The depth of Virgin America's preparation, and the eagerness of its management and investors for the airline to begin service, has not been lost on legacy carriers like Continental, American, United, Delta, and Northwest which have sought, through dilatory tactics and other means, to delay this proceeding and impede Virgin America's ability to offer the public low-priced, high-value service. Not surprisingly, these legacy carriers have proposed or supported egregious information requests that have little to do with legitimate concerns about citizenship and largely ignore the airline's fitness, willingness, and ability to compete in the marketplace. Virgin America is gratified that the Department's Order largely rejected these machinations and focused instead on developing the record necessary to issue a certificate to Virgin America. To be sure, Virgin America understands that the Department has a statutory responsibility to satisfy itself that an applicant is owned and controlled by U.S. citizens. Virgin America believes this determination can and should be a straightforward process in which the Department reviews the information Virgin America has submitted, expresses any citizenship concerns it may have, and works with Virgin America to address and resolve any such concerns. While competitors will no doubt continue trying to link Virgin America to irrelevant issues and otherwise attempt to slow the Department down, the company remains optimistic that the Departments final development of the record will be conducted in an expeditious manner. Virgin America strongly believes that a well-capitalized, well-led, and U.S.-controlled airline is entirely consistent with the Department's deregulation goals of increased competition, new service, and acting in the public interest. The Federal Aviation Administration is moving expeditiously through its safety and technical certification of Virgin America. Accordingly, Virgin America requests that the Department move forward in tandem with its sister agency and reject attempts by competitors to impede appropriate progress and a timely review of Virgin America's application. Counsel: DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
April 26, 2006 Motion for Confidential Treatment Virgin America Inc. respectfully moves the Department to withhold from public disclosure certain proprietary, commercially-sensitive, and confidential business and personal information. This information is being submitted in the form of Confidential Exhibits and Confidential Documents supporting Virgin America's certificate application in the above-captioned docket; in addition to the Exhibits and Documents identified in the attached Index, Virgin America also is refiling confidentially, pursuant to Appendix B of Order 2006-4-15, unredacted versions of pages VAM00422, VAM00425, and VAM00459 of the Confidential Documents. On December 13, 2005 Virgin America submitted Confidential Exhibits and also submitted voluntarily, as Confidential Documents, copies of substantially all the transaction documents associated with Virgin America's initial capitalization on November 21, 2005. By Order 2005-12-13 dated December 23, 2005, the Department granted those Confidential Exhibits and Documents interim confidential treatment and made them available to counsel and outside experts for interested parties. Disclosure of these newly-filed, sensitive business documents and materials, which respond to the requests in Appendices A and B of Order 2006-4-15 and related to the earlier material granted interim confidential treatment, would cause substantial harm to Virgin America's competitive position by disclosing details of its financing and business activities and those of its investors and suppliers. Counsel: DLA Piper Rudnick, John Mietus, 202-861-6466, john.mietus@dlapiper.com
May 4, 2006 Answer of American Airlines to Petition for Reconsideration of Order 2006-4-15 - Bookmarked American Airlines, Inc. hereby answers in opposition to the petition submitted on April 24, 2006 by Virgin America, Inc. for reconsideration of Order 2006-4-15, April 13, 2006, requiring the submission of additional documents and information. The petition should be denied, and the Department should defer processing Virgin America's application pending full compliance with Order 2006-4-15. Virgin America seeks to thwart the Department's fact-finding obligations under the U.S. citizen actual control statute, 49 USC 40102 (a) (15), by offering up vague, incomplete, and self-serving stipulations devised to minimize the pervasive and on-going presence of Sir Richard Branson and the Virgin Group in every aspect of Virgin America's proposed operations. Based on the public record and on the confidential information that the applicant has submitted to date, Virgin America is and will remain under the actual control of Sir Richard and the Virgin Group, notwithstanding the recruitment of additional investors. The petition for reconsideration, if granted, would prevent the Department and interested parties from reviewing the full panoply of contracts, agreements, understandings, commitments, side letters, communications, and other highly relevant evidence that we believe will conclusively establish on-going actual control of Virgin America by non-U.S. citizens. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
May 4, 2006 Answer of Delta Air Lines to Petition for Reconsideration of Order 2006-4-15 Delta hereby files this answer in opposition to the petition filed by Virgin America Inc. seeking reconsideration of Order 2006-4-15, which directed Virgin to submit additional documents and information. Specifically, Virgin asked the Department to eliminate Information Request 1(c) in Appendix A of Order 2006-4-15 and, in lieu thereof, Virgin offers proposed "stipulations" which it plans to submit in response to Information Request 11. Virgin's petition is without merit and is inconsistent with long-standing Department citizenship precedent. Its proposal to substitute stipulations in place of documentary evidence is unprecedented. The petition for reconsideration should be denied. The Department was entirely correct in directing Virgin to submit documents to or from Sir Richard Branson with respect to matters involving the applicant's formation, operations, management, or services. In fact, Information Request 1(c) is too narrow and should be revised to include documents to or from any member of the Virgin Group of Companies, not just Sir Richard Branson. It should not be limited to documents only to or from Sir Richard Branson because this limitation risks omission of key evidence relating to activities conducted on behalf of Sir Richard Branson by his U.K. controlled companies that make up the Virgin Group. Thus, Delta urges the Department to expand the scope of Information Request 1(c). Contrary to Virgin's petition, there is no sound basis for deleting Information Request 1(c) or for allowing Virgin to substitute its own self-serving characterizations of evidence in so-called "stipulations" in place of solid documentary evidence. Delta does not disagree that this case will involve an examination of the "current" citizenship of Virgin. However, the fact that the issue in this proceeding involves an examination of the "current" citizenship of Virgin in no way undercuts the importance of reviewing evidence (not self-serving stipulations) relating to prior activities through which the current applicant's business plans, operations, management, services, cooperative arrangements, branding agreements, etc. have been developed and established. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999
May 4, 2006 Public Answer of Continental Airlines to Petition for Partial Reconsideration of Order 2006-4-15 - Bookmarked Virgin America has only itself to blame that its application remains pending before the Department with no answer date set. Five months after filing its application and more than two months after asking the Department to set an answer date, Virgin America still refuses to provide the critical information related to its ownership and control necessary to evaluate its citizenship. Rather than respond fully to the Department's April 13, 2006 Information Requests, Virgin America has elected to submit a woefully incomplete supplement to its original application and an unprecedented request that the Department accept a one-sentence statement plus three self-serving stipulations in lieu of production of the many relevant documents necessary to evaluate its ties with the Virgin Group. Virgin America's unwillingness to produce documents demonstrating the full extent of its relationship with and dependence on the foreign Virgin Group, coupled with Virgin America's acknowledgement of past control by the Virgin Group and the significant questions about current foreign control (and ownership) raised by the existing record, cast doubts on its current citizenship and underscore the need for the Department and interested parties to review more not less, information than requested by Order 2006-4-15. Extremely limited excerpts from Virgin America's "business plan" - which Virgin America has battled to keep entirely secret for almost five months after it submitted other confidential documents - only reinforce these doubts. Although only 3 pages of the "business plan" have been entered into the (confidential) record (and only then within the past 10 days), these snippets are remarkably revealing: they strongly suggest that CONFIDENTIAL. For example, one of the three pages made available from the "business plan" actually appears to be a CONFIDENTIAL. The implication is clear: CONFIDENTIAL. In fact, the Virgin Group has done just that by giving the Fund Investors CONFIDENTIAL Substantial doubts about the role of the foreign Virgin Group rightfully abound. Accordingly, the Department should (1) reject Virgin America's attempt to limit Information Request 1(c) in Order 2006-4-15, (2) direct Virgin America to comply fully with the April 13 Information Requests, (3) clarify and modify the April 13 Information Requests and (4) order Virgin America to provide additional evidence. Additionally, if the Department considers Virgin America's request to accept stipulations rather than real evidence related to foreign control, the Department should adopt the stipulations proposed by Continental in Section I.A.2, infra, rather than those offered by Virgin America. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
May 4, 2006 Continental Airlines Motion for Confidential Treatment Continental moves to withhold from public disclosure the confidential version of its Answer to Virgin America's Petition for Partial Reconsideration and Motion for Clarification and Additional Evidence submitted to the Department today. Continental's confidential Answer/Motion contains information from documents for which access has been limited by the Department's confidential treatment rules and Order 2005-12-13. Accordingly, Continental asks for confidential treatment of the confidential version of its Answer/Motion submitted today to the Department. Continental's confidential Answer/Motion is being served only on counsel for the applicants and other counsel who have submitted valid confidentiality affidavits in this docket. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
March 14, 2006 Re: Ex-Parte Communication with California Governor Schwarzenegger On March 14, 2006, I spoke by telephone to California Governor Arnold Schwarzenegger regarding the application of Virgin America for a certificate from the Department of Transportation to engage in scheduled air transportation. Governor Schwarzenegger expressed his support for the application of Virgin America and indicated that it was important economically for the State of California. During the conversation, I noted to Governor Schwarzenegger that I was prohibited from discussing the merits of the case because it is a contested matter. By: Maria Cino
May 10, 2006 Motion of Virgin America to Strike Material Filed by Continental Airlines Virgin America Inc. respectfully moves the Department to strike sections II and V of the May 4, 2006 "Answer of Continental Airlines, Inc. to Petition for Partial Reconsideration of Order 2006-4-15 and Motion for Clarification and Additional Evidence." Not only is the entire pleading a transparent and renewed attempt to stall this regulatory proceeding, but these sections specifically respond to and request reconsideration of provisions of an Order that the Department issued on April 13, 2006. As such, these sections constitute a petition for reconsideration of that Order, and they should have been filed, pursuant to Rule 14(a) of the Department's Rules of Practice, 14 C.F.R. § 302.14(a), not later than Monday, April 24, 2006. If Continental did not agree with the Department's decisions about those requests in this proceeding, it should have filed a petition for reconsideration no later than April 24. Continental's now-belated attempt to bootstrap those requests and arguments into a separate, formal response to Virgin America's April 24 petition is without merit. Accordingly, Virgin America respectfully requests that the Department recognize that Continental's continuing efforts to hinder this proceeding are out of order and a clear violation of the Department's Rules of Practice, and, thus, that Continental's late-filed disagreements with Order 2006-4-15 should be stricken from the record. Counsel: DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
May 15, 2006 As American stated in its answer filed on May 4, 2006 to Virgin America's petition for reconsideration of Order 2006-4-15, the Department should not proceed with Virgin America's application absent a complete evidentiary record, particularly in light of Sir Richard Branson's explicit public statements on control. Continental's motion should be granted in its entirety so that the Department can reach an informed decision based on all the facts and circumstances of Virgin America's ownership, financial, management, and operational structure; how that structure came about; and the extent of on-going non-U.S. citizen involvement in and influence over the applicant. Virgin America's motion to strike Continental's motion for additional evidence should be denied. Contrary to Virgin America's allegation, Continental's motion is not a late‑filed petition for reconsideration, but is a legitimate response to the vague and incomplete stipulations and the minimal number of confidential documents offered up by Virgin America with its petition on April 24, 2006. Virgin America has called Continental's motion "out of order" in the media, but it is Virgin America's conscious decision to stonewall the Department's evidentiary requests and derail the fact-finding process that is out of order. Given the unique circumstances of the dominant roles played by Sir Richard and the Virgin Group in Virgin America, coupled with Sir Richard's public statements on control, the Department should engage in the most exacting scrutiny of this application. In the SkyTeam antitrust immunity docket, OST-2004-19214, the application was filed on September 24, 2004 and deemed complete on June 1, 2005, some eight months later. As was the case in that docket, the applicant here appears unwilling to submit relevant evidence, even in the face of an explicit order directing that it do so. Virgin America should not be heard to complain about delay when it has refused to submit required information. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
May 15, 2006 Consolidated Answer of Northwest Airlines There are critical public interest reasons to assure the record is complete in this case. Under existing law and DOT policy, the Department must determine that Virgin America is owned and actually controlled by U.S. citizens. See, 49 U.S.C. 40102(a)(15). In that regard, the Department must carefully consider the degree of control exerted over Virgin America by U.K. nationals of the Virgin Group, as well as assessing the independence of Virgin America's key U.S. management personnel who may be "beholden" to U.K. interests. As detailed in American's May 4 Answer to Virgin America's Petition for Reconsideration of Order 2006-4-15, Sir Richard Branson has directly and repeatedly asserted that the Virgin Group would not offer a Virgin branded domestic product in the United States unless they were in control of the carrier. Counsel: Northwest, Alexander Van der Bellen, 202-842-3193
May 15, 2006 With the April 25, 2006 filing of its Supplement No. 2, Virgin America believes its application is substantially complete. Thus, under 49 U.S.C. § 41108(b) and Rules 211(b) and 220, Virgin America believes it is appropriate for the Department to issue a procedural order and rule on Virgin America's application while adhering to strict deadlines. Unfortunately, opponents would have the Department place itself in an untenable situation where it could not meet those deadlines. Continental, in particular, seems to take its cues for information requests from antitrust immunity proceedings and typical civil litigation, where there is no analogous, statutory deadline for governmental action. Continental suggests that the review and production should take place worldwide, at all Virgin-branded entities, and involve documents generated over a 2 1/2-year period. Material produced as a result of the global exercise that Continental envisions would then need to be reviewed by the Department, draining substantial government resources. Such a review and production would be exceedingly burdensome; however, it ultimately will not assist the Department in "resolving the issues at stake" in the proceeding, one of the factors used in discovery related jurisprudence. It is worth noting that Continental and American have used their answers to the Department's Order as a means by which they wish to add additional material to the record and to make substantive arguments concerning Virgin America's application. It is simply disingenuous to claim that there still is not enough information to set a date for substantive answers while proceeding to answer the application at the same time. Counsel: DLA Piper Rudnick, William Evans, 202-861-6459, bill.evans@dlapiper.com
May 16, 2006 Answer of Delta Air Lines to Motion of Virgin America to Strike Virgin's motion is without merit and should be denied. Conspicuously absent from Virgin's motion is any discussion of the merits of Continental's request for information and any explanation of why the documents and information requested by Continental would not be relevant to the critical ownership and control issues in this proceeding. Instead, Virgin uses its motion to vent about delays and to assert alleged and erroneous procedural problems with Continental's request. Virgin can only blame itself for the delays in processing its application. Instead of being forthright and open, it has submitted a confusing and constantly changing array of information while strenuously hiding relevant information and documents from the Department and interested parties by trying to substitute its own self-serving "stipulations" in lieu of hard evidence. There is nothing impermissible about Continental's request that the Department direct Virgin to submit additional information relevant to the ownership and actual control issues. Continental has demonstrated that the requested information would be highly relevant to these determinations. Virgin's Motion makes no effort to refute that showing. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999
May 19, 2006 Answer of Air Line Pilots Association to Motion of Virgin America to Strike Virgin's history and structure raise serious questions about whether actual control of the company may be in foreign hands. Virgin is willing to stipulate that foreign entities affiliated with Mr. Richard Branson prepared its initial business plan, hired several of its key managers and officers, facilitated the creation of some of its basic infrastructure, and directly solicited U.S. investors for the company. All this airline creation activity comes against the backdrop of repeated statements by Mr. Branson that he would not place the Virgin brand on a U.S. airline that he or his affiliated foreign companies could not control. Continental has carefully explained the connection between each of its requests in its May 4 Motion for Clarification and Additional Information and the citizenship assessment that must be made. While the requests are lengthy and detailed, Virgin's genesis and extraordinarily complex -- and rather opaque -- ownership structure dictate that the additional information be supplied. Indeed, there are certain critical subjects -- such as the role of Mr. Donald Carty in Virgin and his relationship with other aeronautical entities, and the extent to which Virgin's business plan reflects the past and intended future involvement of Mr. Branson or his affiliates in the key economic decisions of the company -about which little information has been produced so far. Continental has demonstrated that the requested information is germane to an evaluation of its citizenship. Accordingly, Virgin's Motion to Strike should be denied. Counsel: ALPA, Russ Bailey, 202-797-4086, russell.bailey@alpa.org
May 19, 2006 Answer of Continental Airlines to Motion to Strike Virgin America "doth protest too much." Five months after Virgin America submitted its application, Virgin America still has failed to provide all the information required by the Department's rules, much less the additional information necessary to analyze the extraordinary ownership and control structure devised by the Virgin Group. If Virgin America has nothing to hide, why is Virgin America stonewalling the Department on producing the evidence needed to fill the huge gaps in the record and to counter its foreign founder's vow "never" to get involved in a Virgin-branded company "unless we could control and protect the Virgin name"? Why does Virgin America continue to blame others for the delay caused by its own refusal to comply with the Department's Information Request and the requirements of 14 C.F.R. Part 204? As American, Delta and Northwest have shown in their opposition to Virgin America's Motion to Strike, Virgin America's attacks on other carriers cannot hide the fact that the current record lacks critical evidence needed to assess whether Virgin America will be able to meet the "actual control" requirement in 49 U.S.C. § 40102(a)(15). Based on its current capital, Virgin America is clearly not now a U.S. citizen, and it is presumptuous for Virgin America to insist that the Department rush to judgment before Virgin America meets the most rudimentary ownership requirements and without providing sufficient information about its projected ownership and control, including information requested by Continental. The Department should deny Virgin America's baseless motion to strike and should grant Continental's motion of May 4. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
Order 2006-7-14 Issued and Served July 12, 2006 Order Establishing Procedural Dates and Directing Comment We have carefully reviewed the record in this proceeding and now believe that it contains sufficient information upon which to base a decision. We will, therefore, declare Virgin America's application to be substantially complete and establish procedural dates for deciding this case. To provide all interested parties sufficient time to analyze adequately and comment fully on all material in the public and non-public record, interested parties should file answers to Virgin America's application no later than twenty-one calendar days from the service date of this order, with replies due no later than fourteen calendar days after the last day for filing answers. By: Michael Reynolds
July 14, 2006 Counsel of record for Virgin America, the applicant in this proceeding, now practice at a new law firm. Counsel: John Mietus, 301-571-9334, john@mietuslaw.com
July 27, 2006 Supplement No. 3 of Virgin America to Application - Bookmarked Virgin America Inc. respectfully supplements its December 8, 2005 application for a certificate of public convenience and necessity to advise the Department of new developments and information concerning the applicant. Each of the two investors in Virgin America has substituted a new director to replace a director who has departed. Brief biographical information on the new directors is provided below, and resumes are provided in Exhibit 7b. The substitution of these two directors does not alter the compliance information provided in sections l, m, o, p, and q of Exhibit 1 to the Application. Virgin America also has obtained $2.5 million in additional, temporary financing from Virgin Management Limited. A promissory note signed by Virgin America on July 2, 2006, and related documents affirmed by the Board on July 11, are contained in new Confidential Documents filed under seal with a motion for confidential treatment. Finally, Virgin America is pleased to submit for the record, as Exhibit 27, a July 25, 2006 study by the Campbell-Hill Aviation Group, Inc. entitled "Virgin America's Benefits to U.S. Consumers." The study quantifies how the introduction of low-fare service by Virgin America could reduce market fares, increase service frequency and capacity, and stimulate new passenger traffic. Counsel: John Mietus, 301-571-9334, john@mietuslaw.com July 27, 2006 Motion for Confidential Treatment Virgin America Inc. respectfully moves the Department to withhold from public disclosure certain proprietary, commercially-sensitive, and confidential business information. This information is being submitted in the form of additional Confidential Documents supporting Virgin America's certificate application in the above-captioned docket. Supplement No. 3 to Virgin America's application in the above-captioned docket indicates that the applicant has received $2.5 million in additional, temporary debt funding to support its pre-certification activities. New pages VAM1184-VAM1200 contain the corresponding Promissory Note (1184-1190) and forms of a Board Resolution by Written Consent (1191-1193) and of a Consent and Waiver (1194-1200) as they were approved. Because these documents contain confidential business information relating to the applicant's funding, their disclosure would cause substantial harm to Virgin America's competitive position by disclosing details of its financing activities. Counsel: John Mietus, 301-571-9334, john@mietuslaw.com
August 2, 2006 Answer of Air Line Pilots Association in Opposition - Bookmarked The ALPA hereby answers the application of Virgin America. Because Virgin America is under the control of the Virgin Group, a foreign entity, the application should be denied. ALPA submits that each one of the devices discussed above would, by itself, require a determination that the Virgin Group controls Virgin America. Taken together, and as a "totality of the circumstances," they simply dictate that the conclusion that Virgin America is not a "citizen of the United States" under the aviation statutes. Accordingly, the application of Virgin America for a certificate of public convenience and necessity should be denied. Counsel: ALPA, Russell Bailey, 202-797-4086, russell.bailey@alpa.org
August 2, 2006 Motion of ALPA for Confidential Treatment ALPA moves to withhold from public disclosure the confidential version of its Answer to Virgin America's Application for a Certificate of Public Convenience and Necessity. In accordance with Rule 12, ALPA is submitting copies of its confidential Answer to the Department separately in a sealed envelope bearing the caption for this case and marked "Confidential Treatment Requested Under 301.12.'' ALPA's confidential Answer contains information from documents for which access has ALPA's confidential Answer is being served only on counsel for the applicants and other counsel who have submitted valid confidentiality affidavits in this docket. ALPA is submitting in this docket a version of the Answer with the confidential portions redacted and serving it on counsel for the applicants and all other persons listed on the attached service list. Counsel: ALPA, Russell Bailey, 202-797-4086, russell.bailey@alpa.org
August 2, 2006 Motion of American Airlines to Dismiss or Hold in Abeyance and Answer - Bookmarked Virgin America cannot deny that Mr. Reid was selected as president in April 2004 by foreign interests when the applicant was in every respect the creature of Sir Richard Branson and the Virgin Group, and lacked even the pretense of U.S. investors. Indeed, Mr. Reid, in an interview earlier this year, acknowledged that he was chosen in 2004 by Virgin USA - a non-U.S. citizen entity - "[s]o you could say ultimately I was hired by Richard [Branson] " Accordingly, since Virgin America does not have a U.S. citizen president, its application should be dismissed for failure to satisfy one of the most fundamental requirements of 49 USC 40102 (a) (15) and 14 CFR Part 204. As a matter of sound policy, the Department should not entertain a proposal from an applicant at a time when more than 90% of its funding has been provided by foreign interests. If Virgin America wishes to engage the resources of the Department in considering its application, it should come forward with the proposed equity positions of its alleged U.S. investors fully paid up. The pending application should be dismissed, and refiling should be accepted only in the event that the proposed second closing with the hedge fund investors has been consummated. The Department is now in the final stages of a rulemaking proceeding (OST-2003-15759) which may result in a revised interpretation of "foreign control" that would be highly relevant in this docket. The conclusion of the rulemaking may occur within the next few weeks. In filing its application last December, Virgin America acknowledged the existence of the foreign control NPRM, but asked that its proposal be considered under "existing laws and regulations." If Virgin America's application is not dismissed, and if the Department adopts a new policy on foreign control, the Department should request comments from interested parties on whether Virgin America's application should be judged under former precedent or under the new rule. If the Department decides to consider Virgin America under the new rule, interested parties should be provided a full opportunity to submit further answers and objections. While we do not know the precise details of the final rule on foreign control that the Department may adopt, we believe that Virgin America would fail to qualify as a U.S. citizen under any standard, as we would demonstrate should a new rule be issued and applied in this docket. Accordingly, Virgin America's application, if not dismissed outright, should be held in abeyance until the conclusion of the Department's foreign control rulemaking now pending in OST-2003-15759. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
August 2, 2006 Motion of American Airlines for Confidential Treatment American Airlines, Inc., under 14 CFR 302.12, hereby moves the Department for confidential treatment of the accompanying confidential motion and answer to Virgin America Inc. Our confidential motion and answer makes reference to confidential materials submitted in this docket by Virgin America. This material is protected from public disclosure by Order 2005-12-13, December 23, 2005. Consistent with that order, we will provide our confidential motion and answer only to holders of valid confidentiality affidavits on file in this docket. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
August 2, 2006 Answer of Continental Airlines - Bookmarked Virgin America is a foreign funded, owned and controlled would-be airline masquerading as a U.S. airline applicant. Although Virgin America continues to defy the Department's evidence requests in Order 2006-4-15, Virgin America's own documents and pronouncements from Sir Richard Branson and Fred Reid, Virgin America's president/CEO, show conclusively that Virgin America does not meet the U.S. citizenship test in 49 U.S.C. 5 40102(a)(15)(C) because (1) the Virgin Group has complete and actual control over Virgin America, (2) Virgin America does not comply with the ownership requirements of the U.S. citizenship test (in part because the Virgin Group in actuality has ownership CONFIDENTIAL of Virgin America's equity CONFIDENTIAL basis, and potentially substantially more, through a labyrinth CONFIDENTIAL, (3) Virgin America's president/CEO cannot be considered a U.S. citizen and (4) less than two-thirds of Virgin America's board of directors are U.S. citizens. The Virgin Group's control over Virgin America is so pervasive that Virgin America would not even qualify as a U.S. airline under the Department's proposal to expand permissible foreign control of U.S. airlines for investors from open skies countries, even if those standards could ever be applied to investors from a country like the United Kingdom, when access to its most important airport (London Heathrow) is unavailable to new U.S. carriers. While the foreign control shown by the current record is impermissible by any standard, it is just the tip of the iceberg. If Virgin America had deigned to comply with Order 2006-4-15 and produced the additional, highly probative evidence ordered by the Department and requested by other parties, the full extent of the foreign Virgin Group's control would be even more evident. Since Virgin America fails the test for U.S. citizenship, Continental opposes Virgin America's application for certificate authority and urges the Department to deny it. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
August 2, 2006 Motion of Continental Airlines for Confidential Treatment Continental moves to withhold from public disclosure the confidential version of its answer to Virgin America's application submitted to the Department today. In accordance with Rule 12, Continental is submitting copies of its confidential answer to the Department separately in a sealed envelope bearing the caption for this case and marked "Confidential Treatment Requested Under 302.12." Continental's confidential answer contains information from documents for which access has been limited by the Department's confidential treatment rules and Order 2005-12-13. Accordingly, Continental asks for confidential treatment of the confidential answer submitted today to the Department. Continental's public version of its answer contains the word "CONFIDENTIAL" to show where confidential information has been removed. The public version of the answer is being filed in this docket and served on counsel for the applicants and all other persons listed on the attached service list. Continental's confidential answer is being served only on counsel for the applicant and other counsel who have submitted valid confidentiality affidavits in this docket. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
August 2, 2006 Answer of Dallas/Ft. Worth International Airport in Support of Application By Order 2006-7-14 the Department found Virgin America’s Certificate Application complete, and directed interested parties to answer by this date. The Dallas/Fort Worth International Airport hereby answers in support of Virgin America’s application for a Certificate of Public Convenience and Necessity as a new U.S. airline to engage in scheduled interstate air transportation. We urge that the Department grant Virgin America this certificate so that it may commence its planned service as soon as possible, and so that it can begin service at DFW Airport thereafter in 2007. By: Jeffrey Fegan, 972-574-3200, jfegan@dfwairport.com
August 2, 2006 Answer of Delta Air Lines in Opposition - Bookmarked Delta hereby answers the application of Virgin America Inc. for a certificate of public convenience and necessity. For the reasons explained below, Virgin has failed to meet its burden of demonstrating that it is a "citizen of the United States." The record demonstrates that Virgin had been, currently is, and will be in the future funded and controlled principally by foreign entities. Therefore, on the basis of the current record, the Application should be denied. If the Department is not prepared to deny the Application based on the current record, given the complexity of the foreign ownership and control relationships between Virgin and the U.K. Virgin Group of companies, and the disputes of material facts concerning both ownership and control, this is one of those rare cases in which any further consideration of the citizenship issue should be conducted on the basis of formal evidentiary procedures. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
August 2, 2006 Motion of Delta Air Lines for Confidential Treatment Delta moves to withhold from public disclosure the confidential version of its Answer to the Application of Virgin America Inc. Delta’s confidential Answer contains information for which Virgin America has requested confidential treatment and for which access has been limited by the Department’s confidential treatment Order 2005-12-13. Therefore, Delta asks for confidential treatment of the confidential version of its Answer submitted today to the Department. Delta’s Confidential Answer will only be provided to counsel for the applicants and other counsel and outside experts who have submitted confidentiality affidavits in this docket. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
August 2, 2006 Answer in Opposition of US Airways Group - Bookmarked US Airways believes that VAM's application should be denied/dismissed because the supporting documents demonstrate that VAM does not satisfy the statutory requirements for DOT to grant the requested economic authority. Specifically, VAM neither 1) meets the statutory test for non-US equity; nor 2) provides unambiguous proof that VAM will be substantially controlled by US citizens. US Airways chooses to focus its comments on VAM's foreign equity levels which result in an ownership capital structure that is non-compliant with US law. While the issue of control by US citizens is no less important, US Airways believes the shortcomings of VAM's application have been well-documents by other carrier and labor unions, and US Airways fully supports those views. Moreover, given the fatal flaws in VAM's capital structure, the Department can dismiss/deny VAM's application on the basis of defective capital structure alone. Finally, US Airways believes that the Department should take into account the important policy considerations associated with this proceeding. VAM was founded by British citizens and is backed by British investors. Given the lack of US carrier access to the leading UK airport - London Heathrow - DOT should not enable UK citizens, including the owner of the Virgin Atlantic - a Heathrow incumbent - to enjoy enhanced access to the United States aviation marketplace, while all but two US carriers have no operating access to LHR. Counsel: US Airways, Howard Kass, 202-328-5153, howard_kass@usairways.com
August 2, 2006 Motion of US Airways for Confidential Treatment US Airways respectfully moves to withhold from public disclosure the confidential version of its Answer in Opposition submitted to the Department today. In accordance with Rule 12, US Airways is submitting copies of its confidential Answer to the Department separately in a sealed envelope bearing the caption for this case and marked "Confidential Treatment Requested Under § 302.12." US Airways' confidential Answer contains information from documents for which access has been limited by the Department's confidential treatment rules and Order 2005-12-13. US Airways' public version of its Answer contains the bracketed word "REDACTED" to show where confidential information has been removed. US Airways' confidential Answer is being served only on counsel for the applicants and other counsel who have submitted valid confidentiality affidavits in this docket. US Airways is submitting in this docket a version of its Answer with the confidential portions redacted. This redacted version of its Answer is being served on counsel for the applicants and all other persons on the attached service list. Counsel: US Airways, Howard Kass, 202-328-5153, howard_kass@usairways.com
August 3, 2006 Notice of Substitution of Counsel PLEASE TAKE NOTICE that Kenneth P. Quinn, Jennifer E. Trock, and David M. Endersbee are hereby substituted for John Mietus and William Evans as counsel of record for Virgin America in this proceeding. Accordingly, please substitute the above‑named counsel for Virgin America on the service list to receive all orders, notices, pleadings, correspondence, and other documents in this proceeding. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
August 8, 2006 Motion of Virgin America to Modify Procedural Dates Assocaited with the Motion of American Airlines Virgin respectfully requests that the Department extend the due date for answers to American's motion to coincide with the due date for replies to the answers filed in accordance with Order 2006-7-14, that the answer period to this motion be shortened, and that the Department promptly grant the relief requested herein. Virgin America's counsel has contacted American's counsel, and has been informed that American does not object to this motion. American's motion raises some of the same issues as will be addressed in Virgin America's consolidated reply. One consolidated reply to all answers and to American's motion is more efficient than both an answer and a reply addressing the same issues, and will provide a more substantial and complete record upon which the Department may rely when it considers American's motion. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
Served August 10, 2006 Notice Extending Answer Period On August 2, 2006, American Airlines. Inc. filed an answer in response to the application filed by Virgin America Inc., urging the Department to deny the application, together with two Motions moving that the Department dismiss or, in the alternative, hold in abeyance such application. Part 302 of the Department's regulations, provides, among other things, that replies to answers to applications shall be filed within fourteen calendar (lays after the filing of the answer, and that answers to motions shall be filed within seven calendar days after the service date of such motions. On August 8, 2006, Virgin America filed a motion requesting that the Department extend the due date for answers to American's motion to coincide with the due date for replies to the answers filed to its application, i.e., by August 16, 2006, and shorten the answer period to its motion to August 10, 2006. In support of its request, Virgin America states that the issues raised by American's motion will he addressed in the company's consolidated reply to all answers filed to its application, and believes that consolidating its reply, to include the issues noted by American, will provide the Department with a more substantial and complete record. Virgin America also noted that American did not object to its motion. We have reviewed Virgin America's request and find it appropriate in this matter to extend the answer period to respond to American's motions to August 16, 2006, and shorten the answer period for Virgin America's motion to August 11, 2006, in order to promote administrative efficiency. By: Todd Homan
August 15, 2006 Supplement No. 4 of Virgin America to Application Delays and associated costs that have resulted from of our opponents dilatory legal tactics have made it necessary for Virgin America to obtain $52,956,387.56 in additional, temporary financing. A Promissory Note signed by Virgin America on August 9, 2006, and related documents affirmed by the Board on August 9, 20061 are contained in new Confidential Documents filed under seal with a Motion for Confidential Treatment. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
August 15, 2006 Motion for Confidential Treatment Virgin America Inc. respectfully moves the Department to withhold from public disclosure certain proprietary, commercially-sensitive, and confidential business and personal information. This information is being submitted in the form of Confidential Exhibits and Confidential Documents supporting Virgin America’s certificate application in the above-captioned docket. Virgin America is filing with this motion Supplement No. 4 to Application of Virgin America Inc., which includes three financial documents. These sensitive documents are relevant to the Department’s review of Virgin America’s Application, but their public disclosure would cause substantial harm to Virgin America’s competitive position by disclosing details of its business and financial activities. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
August 16, 2006 Consolidated Answer and Reply of Continental Airlines Continental supports American's motion to dismiss Virgin America's application and opposes both American's motion to hold Virgin America's application in abeyance pending completion of the foreign control rulemaking in Docket OST-2003-15759 and Delta's fall-back suggestion that the Department consider instituting a formal evidentiary proceeding on Virgin America's application. As the answers filed by Continental, ALPA, American, Delta, and US Airways show, Virgin America fails to qualify as a U.S. citizen under both the Department's current citizenship test and the proposed foreign control rule. To avoid wasting valuable Department resources and rewarding Virgin America's defiance of the Department's requirements, the Department should dismiss or deny Virgin America's application now. Unless the Department dismisses or denies Virgin America's application now, interested parties must have at least 21 days to answer Virgin America's eleventh hour amendment to its application, submitting agreements dated a week ago that Virgin America waited until yesterday to file. Virgin America has no one but itself and the foreign interests controlling it to blame for the timing of this proceeding: this case is about enforcing the rules other new entrants abided by but Virgin America continues to flout, not about competition. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
August 16, 2006 Consolidated Reply of Virgin America - Bookmarked In accordance with Order 2006-7-14, Virgin America Inc. hereby submits the following Consolidated Reply to the Answers filed by Continental, American, Delta, US Airways, and the ALPA, and to American’s motion to dismiss VX’s application or, in the alternative, to hold it in abeyance pending a final rule in the Department’s “actual control” rulemaking. For the reasons stated herein, and in VX’s initial application and in its supplemental filings, the Department should issue an Order to Show Cause finding that VX is a citizen of the United States and is fit, willing, and able to provide interstate scheduled air transportation, and should be granted a certificate of public convenience and necessity. Not surprisingly, VX’s Application has run into fierce opposition from a handful of legacy carriers and a pilot’s union. These Opposing Parties seek to preserve the status quo, prevent viable new competition, or—in the case of Continental—simply attempt to abuse agency process with an 83-page anti-competitive diatribe that rails against basic minority investor protections, while seeking more delay, more documents, and unnecessary process. The Department should recognize the filings of the Opposing Parties for what they are: (1) thinly disguised efforts to prevent consumers from enjoying new competition and service; (2) blatant attempts to use this proceeding to pursue irrelevant aspirations to gain greater access to London’s Heathrow Airport; or (3) part of a lobbying campaign, apparently now successful, to prevent the Department from finalizing its proposed rulemaking on airline citizenship. As Virgin America has stated repeatedly, its Application is not predicated on any Departmental effort to formally relax via rulemaking its existing airline ownership rules. Counsel: Pillsbury Withrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
August 23, 2006 Re: Completion of Exhibit 30, Consent, Waiver and Release Agreement The attached document contains the two additional signatures referenced in footnote one of Virgin America Inc.'s Supplement No. 4 to Application of Virgin America, Inc. filed August 15, 2006. As the submission of this page now completes Exhibit 30, Consent, Wavier and Release Agreement, dated 08/09/2006, we respectfully request that you extend the confidential treatment requested in VX's Motion for Confidential Treatment Under Rule 12 dated August 15, 2006 to this page. For your convenience, we have also attached an updated index of pages to VX's Motion for Confidential Treatment dated August 15, 2006. Counsel: Pillsbury Winthrop, Jennifer Trock, 202-663-9179
Motion of Virgin America for Leave to File and Reply to Answer of Continental Airlines Continental's answer to American's motion is nothing more than a thinly disguised attempt to repeat ‑ now for the 9th time in its substantive pleadings ‑ requests for additional information. By finding that VX's application "contains sufficient information upon which to base a decision," the Department denied Continental's multiple requests on July 12, 2006. In the more than seven days since VX filed its Fourth Supplement, no other party has either filed a motion for leave to respond to the Fourth Supplement or requested more time to do so. For the reasons stated in VX's Consolidated Reply, VX urges the Department to promptly: (1) deny American's motion to dismiss or hold this proceeding in abeyance; (2) deny Delta's request for an evidentiary hearing; and (3) refuse to entertain any further replies to VX' s Fourth Supplement or Consolidated Reply. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
August 25, 2006 Public Motion of American Airlines for Leave to File and Response to Reply of Virgin America If the alleged U.S. investors actually owned and con-trolled Virgin America, one would expect them - and not the U.K. Virgin Group - to provide at least some of the additional interim financial for Virgin America during the application process. Their unwillingness to do so - or to pay in their full equity contribution - strongly suggests that the alleged U.S. investors understand what the record makes clear: Virgin America fails to meet the standards for U.S. citizenship under Federal law, and will not receive the Department's approval. The $52.9 million infusion of additional cash from the U.K. Virgin Group shows once again that Virgin America remains almost totally dependent on foreign funding, and proves that the enterprise is not a U.S. citizen. The U.K. Virgin Group is the sole source of virtually all of Virgin America's capital. The alleged U.S. investors have again declined to contribute toward the applicant's cash needs. The additional $52.9 million is being furnished not by lending institutions, but by those in true control - U.K. citizens. Virgin America is a de facto subsidiary of the U.K. Virgin Group, proving the truth of Sir Richard's statement in 2004 that "we'd never get involved in a company unless we could control it."
August 25, 2006 Motion of American Airlines for Confidential Treatment Our confidential motion and response makes reference to confidential materials submitted in this docket by Virgin America. This material is protected from public disclosure by Order 2005-12-13, December 23, 2005. Consistent with that order, we will provide our confidential motion and response only to Virgin America and to holders of valid confidentiality affidavits on file in this docket. Counsel: American, Carl Nelson, 202-496-5647
August 25 ,2006 Motion of Delta Air Lines for Leave to File and Response to Reply of Virgin America Virgin America's Consolidated Reply is a well written piece of legal legerdemain which ignores history, obfuscates the facts, and distorts the true control relationships between foreign entities and the applicant. The reality is that Virgin America's latest submissions do not rebut the substantial evidence demonstrating that Virgin America is both owned and actually controlled by foreign entities. No lengthy discussions about the nuances of corporate law and organizational structure can change the fact that Virgin America's funding, creation, development, market brand, business plan, aircraft fleet, investors, foreign directors and management team were all developed by, and funnel down from, the foreign Virgin Group and Sir Richard Branson. This is not a case where the foreign entities which created and developed the applicant sold-out and left the scene. Instead, they remain deeply entrenched at all levels of the company, from financing (both debt and equity), to marketing (through the Virgin brand), to the business plan, to the management team. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
August 25, 2006 Motion of Delta Air Lines for Confidential Treatment Delta’s confidential Response contains information for which Virgin America has requested confidential treatment and for which access has been limited by the Department’s confidential treatment Order 2005-12-13. Therefore, Delta asks for confidential treatment of the confidential version of its Response submitted today to the Department. Delta’s Confidential Response will only be provided to counsel for the applicants and other counsel and outside experts who have submitted confidentiality affidavits in this docket. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
August 28, 2006 Motion for Leave to File and Response of US Airways to Reply of Virgin America On August 2, 2006, US Airways Group filed its Answer in Opposition in this docket. Those comments focused not only on the nonconformance of Virgin America's capital structure with U.S. law, but also on the fact that this case involves a predominance of investors from a nation, the U.K., which severely restricts U.S. airlines' market access by means of an highly protectionist air service bilateral. VAM's dismissal of the latter fact as "irrelevant" is without merit, and requires this brief response. VAM offers no convincing support for its claim that the UK's highly-restrictive approach to US carrier market access - especially at the most critical airport, London Heathrow - should be irrelevant to the Department's review of this application. The cases on which VAM relies for this proposition - Pacific Southwest (Order 1980-3-26) and Legend Airlines (Order 1998-12-29) - are simply not applicable to a certificate/fitness evaluation. US Airways urges the Department to reject VAM's efforts to discount the state of US-UK bilateral relations as somehow not germane to the evaluation of VAM's certificate. Counsel: US Airways, Howard Kass, 202-326-5153, howard_kass@usairways.com
August 30, 2006 Answer of Virgin America to Motions for Leave to File of Delta, American and US Airways Virgin America hereby answers the motions for leave to file unauthorized replies and responses by Delta, American and US Airways. The Department should deny each of these motions for three separate reasons. First, the Department's July 12, 2006 procedural order precludes additional responses to VX's reply. Second, these responses raise no significant or unaddressed issues. Third, the only "new" issue - the response to the Fourth supplement - was anticipated and addressed by VX in its Reply and does not raise any issue justifying unauthorized replies, because the questions related to the supplemental financing will be moot at the Second Closing. Virgin American respectfully requests that the Department (i) deny the instant motions of Delta, American, and US Airways; (ii) deny any future opposing party motions; and (iii) proceed to issue a Show Cause Order and a subsequent certificate of public convenience and necessity. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
August 30, 2006 Motion of Virgin America for Confidential Treatment At this time, Virgin America is filing an Answer which includes sensitive information relevant to the Department's review of VX's Application. Public disclosure of this information would cause substantial harm to VX's competitive position by disclosing details of its financing. Concurrently with this motion, VX is filing a public version of its Answer with the confidential information redacted. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
August 30, 2006 Surreply of Continental Airlines and Motion for Leave to File - Bookmarked Virgin America is right about one thing: the Department should make a decision on Virgin America's application immediately. Since Virgin America is foreign owned and foreign controlled, it fails to meet the US citizenship test, and its application must be denied at once. While Virgin America's lengthy reply is filled with irrelevant promotional material, contradictory statements, distortions and outlandish accusations, Virgin America's reply fails to rebut the essential points made by ALPA, American, Continental, Delta and US Airways. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
August 30, 2006 Motion of Continental Airlines for Confidential Treatment Continental's confidential surreply/motion contains information from documents for which access has been limited by the Department's confidential treatment rules and Order 2005-12-13. Accordingly, Continental asks for confidential treatment of the confidential version of its surreply/motion submitted today to the Department. Continental's confidential surreply/motion is being served only on counsel for the applicants and other counsel who have submitted valid confidentiality affidavits in this docket. Continental is submitting in this docket a version of the pleading with the confidential portions redacted and serving it on counsel for the applicants and all other persons listed on the attached service list. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
September 7, 2006 Motion of Virgin America to Strike and for Immediate Action While the responses filed by American, Delta, and US Airways are also unauthorized, Continental waited five days after the first unauthorized filings by Delta and American to file what amounts to a completely separate answer - not a mere comment on VX's Fourth Supplement. In addition, while Continental requested 21 days to review and comment on VX's Supplement, its Surreply clearly shows it did not need the extra time requested and that its true goal was nothing less than further delay. VX should not have to expend limited resources to fend off a competitor bent on stifling competition or using this docket to express its displeasure over its inability to gain access to Heathrow. Nor should the Department have to expend resources to comb through Continental's unauthorized and late-filed pleadings for arguments that should have been (and largely were) made in its initial Answer. Virgin America respectfully requests that the Department (1) take immediate action to strike the unauthorized and late-filed Surreply filed by Continental; (2) deny Continental's motion for leave to file and motion for leave to file out of time; and (3) prohibit future unauthorized pleadings by Continental. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
September 11, 2006 Motion for Leave to and Response of Virgin America to Continental's Surreply - Bookmarked Virgin America is pleased to see that Continental is in agreement with VX on one central point: that the Department should make a decision on VX's application immediately. Other new entrant air carrier applications, like jetBlue, went from application to Show Cause Order to Final Order in only four months. VX's application has been pending before the Department without a Show Cause Order for over nine months. In the meantime, consumers flying on Continental and other legacy airlines are often on older, more crowded aircraft flying more circuitous routes and paying much more than they would otherwise be offered were the Department to allow Virgin America's to begin operations. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
September 11, 2006 Motion of Virgin America for Confidential Treatment Under Rule 12 Hereby files this Motion for Confidential Treatment of the designated portions of its Response to Continental's Surreply which is attached hereto in a sealed envelope Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
September 15, 2006 Answer of Continental Airlines to Motion to Strike Rather than considering Virgin America's motion to strike Continental's surreply, the Department should consider promptly all of the pleadings before it including Continental's surreply and Virgin America's 23‑page public and 42‑page confidential responses to the surreply ‑ and deny Virgin America's application for certificate authority. Since Virgin America has failed to meet its legal obligation to demonstrate U.S. citizenship, the Virgin America application for an air carrier certificate remains ripe for denial. Continental continues to urge the Department to take immediate action to deny the Virgin America application and believes any further response to Virgin America would be counterproductive, stimulate additional Virgin America pleadings that are unnecessary and prompt further delay of the Department's decision. Counsel: Continental and Crowell & Moring, Bruce Keiner, 202-624-2500
Order 2006-12-23 Issued and Served December 27, 2006 Order to Show Cause - Bookmarked After a careful review of the record now before us, we tentatively find that: (1) less than 75 percent of the total equity of the applicant, Virgin America, is held by U.S. citizens, and (2) Virgin America is under the actual control of Carola Holdings Limited, Virgin Management Limited, Virgin Group Investments Limited, and Virgin USA, inc., collectively referred to herein as the "Virgin Group" or the "Virgin group of companies," and Sir Richard Branson, all of whom are U.K. citizens) We emphasize that U.S. aviation law does not prohibit U.S. citizens from entering into arms-length franchise arrangements with foreign airlines; but the totality of circumstances presented in this matter persuades us that, at this stage, the applicant has not shown that it is or will remain sufficiently independent of foreign control to satisfy our citizenship requirement. Therefore, by this order, we propose to conclude that Virgin America is not a U.S. citizen as defined in 49 U.S.C. § 40102(a)(15) and hence to deny its application for interstate scheduled air transportation of persons, property, and mail under 49 U.S.C. § 41102, As is our practice, we provide a period of 14 days to the applicant and other interested persons to comment on this proposed decision. By: Andrew Steinberg
January 8, 2007 Motion for Extension of Time to File its Objection in Response to the Department's Show Cause Order Virgin America, Inc. respectfully moves for an extension of time of three business days, until January 16, 2007, to file its Objections and response to the Department’s Show Cause Order rendered on December 27, 2006 in the above-captioned matter. Order 2006-12-23. Virgin America’s application for economic authority has been pending before the Department for over a year, and the Department itself took over 150 days following its certification that Virgin America’s application was “substantially complete” to issue its Show Cause Order. The Show Cause Order raises a variety of issues regarding the applicant’s citizenship, requiring detailed and thorough responses, which Virgin America intends to submit, fully detailing its compliance with the Department’s citizenship requirements. Counsel: Pillsbury Wintrhop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
Served January 10, 2007 Notice Extending Time to File Objection On January 8, 2007, Virgin America filed a motion requesting that the Department extend the due date for objections to Order 2006-12-23, to January 16, 2007. In support of its request, Virgin America states that the additional time requested would allow the company to submit to the Department detailed and thorough responses describing its full compliance with the variety of issues regarding its citizenship raised in that order. By letter dated January 9, 2007, Virgin America notified the Department that it had polled interested parties and that there were no objections to its request to extend the objection period and that interested parties had also agreed that the date for filing answers to Virgin America’s objection be extended to January 30, 2007. Under these circumstances, we have determined it appropriate to grant Virgin America the extension it requested and extend the date for interested parties to file answers to the company’s objection. Therefore, on January 9, 2007, we orally advised Virgin America that we were extending the objection period to Order 2006-12-23 to January 16, 2007, and the period for the filing of answers to objections to January 30, 2007. We confirm our oral action herein. By: Todd Homan
January 16, 2007 Confirmation Letter - Filing Extension This confirms, on behalf of our client, Virgin America, Inc., our oral request today for a one day extension for time to file our Objections to Order 2006-12-23. By Notice dated January 10, 2007, the Department extended the due date for objections until January 16, 2007. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8898, kenneth.quinn@pillsburylaw.com
Janaury 17, 2007 Objection of Virgin America to Order 2006-12-23 and Motion for Leave to File Additional Evidentiary Material - Bookmarked
Two days after Christmas 2006, and more than a year after the application was filed, DOT issued an unprecedented order tentatively rejecting the application by Virgin America – a start‑up U.S. domestic air carrier ‑ to introduce new and competitive low‑cost domestic airline service. This service would save U.S. consumers hundreds of millions of dollars annually, while improving immeasurably the conditions under which they presently are forced to travel. DOT tentatively rejected the application to the apparent delight of several of Virgin America's competitors, many of which filed voluminous and unauthorized pleadings in this matter. Others are now expressing newfound interest in serving San Francisco, while recently gaining access to Virgin America's confidential materials on file at the Department. The result of DOT's delay and its tentative decision has already cost the company tens of millions of dollars and it will cost American consumers, workers, and investors hundreds of millions more in lost opportunities. Virgin America offers American consumers the prospect of low cost, high quality airline service at a time when existing carriers are raising fares, restricting the number of flights, and maintaining largely abysmal service levels. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8898, kenneth.quinn@pillsburylaw.com
Served January 19, 2007 Notice Announcing an Extension of Time to File Answers to Objections to Order 2006-12-23 On January 8, 2007, Virgin America, Inc. filed a motion requesting that the Department extend the due date for objections to Order 2006-12-23, issued December 27, 2006, from January 10 to January 16, 2007. By Notice dated January 10, 2007, we determined it appropriate to grant Virgin America’s request. At the same time, we extended the period for the filing of answers to objections to January 30, 2007. On January 16, 2007, Virgin America submitted a letter, addressed to the Chief of the Department’s Dockets section, to the effect that it required an extension of time to file its Objections. The applicant stated that the additional time was necessary in order to allow it to provide new and supplementary evidence directly responsive to our tentative decision and Virgin America’s citizenship. This letter does not show any evidence of having been served on the other parties to the proceeding. Two days later, the applicant filed Objections to Order 2006-12-23, accompanied by substantial new evidentiary submissions, under cover of a Motion for Leave to File Additional Evidentiary Material. Given these circumstances, and in an effort to preserve the integrity of the Department’s procedures and this record, we find it in the public interest to extend the period for the filing of answers to Virgin America’s Objections to February 1, 2007. Moreover, interested parties will also have until that deadline to comment on any outstanding procedural issues. By: Todd Homan
January 19, 2007 American Airlines, Inc., Delta Air Lines, Inc., and US Airways, Inc. hereby jointly move for suspension of further procedures in this docket pending submission by Virgin America Inc. of additional documents. The Department and interested parties require these documents in order to review and analyze the new application filed by Virgin America on January 17, 2007. Once the record has been deemed complete, interested parties should be allowed at least 21 days to answer Virgin America's new application and its objections to the show-cause order. On January 17, 2007, Virgin America filed lengthy objections to the show-cause order which describe agreements to make wholesale amendments to the documents underlying its initial application, as well as to make various new agreements, purporting to meet the U.S. citizenship test. These descriptions, but not the documents themselves, appear in the body of the objections and in the affidavit of Frances Farrow, a U.K. citizen, long-time insider with the U.K. Virgin Group, and high-level associate of Sir Richard Branson. The amendments and new agreements are only summarily described and characterized, contrary to Virgin America's claim to have submitted a "mountain of evidence." But the applicant has failed to provide the record with the executed texts of any of these fundamental documents. The Department cannot evaluate the new application without these documents. Fairness and due process require a meaningful opportunity for interested parties to review and analyze the actual language of the purported amendments and new agreements, just as the parties were able to do in relation to the source documents underlying Virgin America's initial application. Until all of these documents are executed and produced, the Department should suspend further procedures. If Virgin America expects the Department to consider the new application it filed on January 17, it should produce evidence - in the form of fully executed amendments and new agreements -to support the restructuring claims made in its objections and affidavits. If Virgin America wished to avoid delay in the consideration of its new application, it should have devoted its resources to drafting and executing the actual documents that would purportedly address the citizenship issue, rather than, for example, assembling press clippings, denouncing the Department, and making totally irrelevant claims as to the alleged benefits of its proposed service. Counsel: Carl Nelson, 202-496-5647, carl.nelson@aa.com for American / Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com for Delta / Howard Kass, 202-326-5153, howard@kass@usairways.com for US Airways
January 23, 2007 Answer of Continental Airlines in Support of Joint Motion For the reasons stated in the joint motion of American, Delta and US Airways, submitted on January 19, 2007, the Department should suspend further proceedings in this docket until Virgin America produces the amendments, new agreements and other documents relied upon in its January 17, 2007 response to Order 2006-12-23. After those documents are produced and the Department deems the record complete, interested parties should have at least 21 days to answer Virgin America's "new application and objections to the show-cause order," as American, Delta and US Airways recommend. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500, rbkeiner@crowell.com
January 24, 2007 Re: Errata to Virgin America's Objections to Order 2006-12-23 Virgin America filed Objections to Order 2006-12-23 and Motion for Leave to File Additional Evidentiary Material on January 18, 2007, in the above- captioned proceeding. Included in the Objections at Exhibit 4 was an affidavit of Cyrus Freidheim. The public version of Exhibit 4 available on the Department's Electronic Management System (at pages 115 through 118 of the Objections) contains a clerical error. Accordingly, enclosed is an errata sheet and copies of the pages containing the correct information. Please note that the confidential version of Exhibit 4 filed with the Department, and provided to opposing parties, is correct. Counsel: Pillsbury Winthrop, Jonathan Foglia, 202-663-8210
Served January 26, 2007 On January 19, 2007, American Airlines. Inc., Delta Air Lines, Inc., and US Airways, Inc. jointly filed a Motion requesting the suspension of further procedures in this case. The Movants argue that Virgin America, Inc. should be required to submit to the docket all amendments and revised agreements that Virgin America has only summarized and characterized in its Objections to Order 2006-12-23, served on December 27, 2006. On January 22 and January 23, 2007, the Air Line Pilots Association and Continental Airlines. Inc., respectively, filed in support of the Joint Motion. On January 25, 2007, Virgin America notified the Department that it fully intends to file additional evidentiary materials into the record, among other things, the material noted by the Movants early next week. Given these circumstances, we now find it appropriate to provide interested parties 14 days from the submission of these materials to file answers to Virgin America's Objections. Moreover, interested parties will also have until that deadline to comment on any outstanding procedural issues. Accordingly, we will dismiss as moot the jointly filed Motion for the suspension of further procedures in this case. By: Todd Homan
January 30, 2007 Motion for Leave to File Additional Evidentiary Material Virgin America is providing the requested redlined versions of newly revised documents such as its Stockholders Agreement, Bylaws, Subscription Agreement, Interim Note Agreement, Subordinated Note Agreement, Senior Secured Promissory Notes, and Senior Secured Promissory Notes, Series B, Security Agreement, and Trademark License Agreement. In addition, Virgin America also is filing the referenced new Voting Trust Agreement, which will confirm the commitment of the Virgin Group to place its shares with a U.S. citizen trustee, even though its holdings fall well within the voting equity limits allowed by statute. Finally, Virgin America is also providing the Department with a letter agreement signed by Virgin America and each of its Investors evidencing their commitment to be bound by these newly revised agreements. When combined with the detailed affidavits submitted as part of its Objections, Virgin America's documents truly do amount to overwhelming evidence that demonstrably alters the "totality of the circumstances" and conclusively establishes the validity of its U.S. citizenship. Counsel: PIllsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
February 14, 2007 Public Answer of Air Line Pilots Association in Opposition to the Objections of Virgin America - Bookmarked Virgin America has criticized DOT's order to show cause as, inter alia "devoid of careful deliberation," unaccompanied by any serious consideration of Virgin America's evidence and analysis," and departing from the Department's own precedent and policy "without any reasoned explanation." Objections at 4647). The order flatly refutes these protestations. DOT carefully applied the longstanding "totality of the circumstances" test and the Department's conclusions were fully supported by the record in this proceeding. Even if Virgin America were to make all the changes it proposes in its Objections, the real and potential influence of Virgin Group over the applicant remains broad and deep. For the reasons set out above, the Department should make final its tentative determination that Virgin America is not a U.S. citizen for purposes of the aviation statutes and should deny Virgin America's application. Counsel: ALPA, Russell Bailey, 202-797-4086, russell.bailey@alpa.org
February 13, 2007 Answer of American Airlines to New Application - Public Version - Bookmarked The fundamental question presented is this, Can Virgin America lawfully be deemed a United States citizen in accordance with the statute where Sir Richard Branson and the Virgin Group (1) conceived, designed, and funded the company, (2) not only authored the business plan but also executed scores of contracts with vendors and suppliers that remain in effect, (3) recruited and hired key personnel under long-term employment contracts, (4) restricted the company's scope of operations through a 30-year trademark license agreement, (5) provided $233.3 million in capital while purported U.S. citizen investors have to date paid in only $10 million, and (6) those investors (which include a number of Cayman Islands entities) claim to be U.S. "owners" even though they are protected from risk of loss in the first year of operations by Put agreements obligating the Virgin Group to buy back their shares with 8% interest? Based on the statutory numerical test and in the totality of the circumstances presented, the answer is clearly no, as the Department correctly found in Order 2006-12-23 and should now affirm. The decision is not even close, notwithstanding Virgin America's various proposals to restructure that it submitted after the show-cause order was issued. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
February 13, 2007 Answer of Delta Air Lines - Public Version - Bookmarked The Department should not be swayed to ignore the dictates of the Aviation Code and longstanding Department precedent by Virgin's irrelevant tirade against the opposing parties in this proceeding or its claims of alleged public benefits that might result from its proposed service. For starters, the Department's Show Cause Order vindicated the opponents, demonstrating that their positions were valid and well-founded. Moreover, this case is not about new entry, rather it is about the transparent efforts of a U.K. citizen to circumvent U.S. law and one of the most restrictive U.S. bilateral agreements to establish a U.S. carrier that is owned and controlled by foreign interests. Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
February 14, 2007 Public Answer in Opposition of US Airways Group - Bookmarked VA's lengthy objections to the Show-Cause Order and subsequent submissions are long on rhetoric and criticism of the Department's staff, but provide no new information or arguments warranting revision of the Department's tentative conclusions. Similarly, while VA's pleadings claim that the applicant has rectified the myriad of ownership and control issues found by the Department, the actual confidential material submitted by VA since the Department issued the Show-Cause Order contradicts those claims. The Department has two alternatives at this point: deny or dismiss VA's application, as there is simply no basis for granting VA the requested certificate authority since VA has not demonstrated, and cannot demonstrate, that it is a U.S. citizen under the applicable statutes. Counsel: US Airways, Howard Kass, 202-326-5153, howard_kass@usairways.com
February 14, 2007 Motion of Virgin America for Leave to File Additional Evidentiary Material Virgin America has obtained a new $20 million loan from Cyrus Capital Partners, LP, the proceeds of which will be available to Virgin America after DOT approval of its application and after the Company's Second Closing when the U.S. investors will add $78 million dollars in additional equity to the company's capital structure. Virgin America hereby submits with this motion loan documents comprised of a loan commitment letter from Cyrus Capital and loan term sheet. U.S. investors have made an additional equity investment of $10 million in Virgin America. Specifically, in addition to the new loan facility detailed above, the U.S. investors have agreed to contribute another $10 million in capital in return for additional voting equity. This additional equity will not be subject to the put agreement previously agreed to by the parties. Virgin America submits with this motion a term sheet reflecting an agreement for an additional equity investment by Cyrus Capital of $7.5 million and Black Canyon of $2.5 million, for a total of $10 million. Together, the new $20 million loan from Cyrus Capital and the additional $10 million equity investment by Cyrus Capital and Black Canyon constitute an additional $30 million in funding from U.S. citizens. This new funding, in addition to the considerable investment by U.S. citizens that has already been agreed to, demonstrates clear ownership and further incentive for U.S. citizens to actively control Virgin America. On February 1, 2007, the U.S. citizen controlled Board of Directors of Virgin America: 1) appointed former Secretary of Transportation Samuel K. Skinner to the position of Vice Chairman of the Board; and 2) reappointed the corporate officers of Virgin America. Non‑U.S. citizen Board members recused themselves from both of these actions. In support, Virgin America attaches to this motion a duly executed officer certificate confirming these actions. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
February 15, 2007 Motion of Virgin America for Confidential Treatment Under Rule 12 The documents for which confidential treatment is sought are comprised of the following: a loan term sheet, a loan commitment letter from the lender, and a term sheet for additional voting equity agreed upon between Virgin America and investors. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
Served February 20, 2007 Notice Announcing an Extension of Time to File Answers to Objections to Order 2006-12-23 On February 14, 2007, Virgin America, Inc. filed Motions requesting confidential treatment of certain additional evidentiary material and for leave to file this material out of time, supporting its request for a certificate of public convenience and necessity under 49 U.S.C. § 41102 to engage in interstate scheduled air transportation. We will grant Virgin America's request to file out of time and we will address its request for confidential treatment by separate action. (See Order 2006-12-23, issued December 27, 2006, in which the Department tentatively concluded that Virgin America is not a U.S. citizen as defined in 49 U.S.C. § 40102(a)(15) and proposed to deny its application for interstate scheduled air transportation of persons, property, and mail under 49 U.S.C. § 41102. Virgin America filed its Objections to our tentative decision on January 18, 2007, and filed supplementary material on January 30. Answers to Objections have been filed.) Given the circumstances in this case, and in an effort to have a complete record for decision, we find it in the public interest to provide interested parties an additional seven business days from the service date of this Notice to file answers, addressing this new material. Persons entitled to petition the Department for review of this notice under the Department's Regulations, 14 CFR 385.30, should file their petitions within 10 days of the service date of this order. By: Todd Homan
March 1, 2007 Answer of American Airlines to New Evidentiary Material of Virgin America
Hereby answers the new evidentiary material submitted on February 14, 2007 by Virgin America. The new material is but the latest in a con-tinuous stream of pleadings and amendments by Virgin America attempting to dress up its bid to become a U.S. air carrier. Notwithstanding Virgin America's latest effort, it remains a non‑U.S. citizen. Virgin America continues to fail the statutory numerical test that at least 75% of its equity must be owned by U.S. citizens, and Virgin America continues to be under the actual control of Sir Richard Branson and the Virgin Group based on the totality of the circumstances. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
March 1, 2007 The foreign ownership interests, the Board representation, the trademark license, the development, business plan, and creation of the airline, and the substantial and ongoing financing investments, among others, all show a direct convergence to a foreign citizen - the Virgin Group. Virgin is, and remains under the "actual control" of, a foreign citizen and the record clearly shows that there is the "potential [for foreign citizens] to exercise substantial influence over the carrier," Nothing in these latest materials changes that reality. Accordingly, the Department should finalize its Show Cause Order denying Virgin's certificate application. Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
March 1, 2007 Answer of US Airways to Additional Documents Submitted by Virgin America The following answer sets forth the position of US Airways Group, Inc. to the motion and additional evidentiary material filed by Virgin America on February 14, 2007. As shown below, none of the hedge fund investors' proposed new $10 million equity investment in VA, the previously‑announced $20 million loan to VA by Cyrus Capital, or the VA board resolution rubber‑stamping officer appointments made by the Virgin Group, either individually or collectively resolve the foreign ownership and control concerns identified by the Department, or the concerns described in the answers to VA's objections that were filed by US Airways and other interested parties prior to VA's latest submission. Accordingly, the Department should deny or dismiss VA's Application for a Certificate of Public Convenience and Necessity to engage in interstate scheduled air transportation. Counsel: US Airways, Howard Kass, 202-326-5153, howard_kass@usairways.com
March 14, 2007 While American, Delta, US Airways, and ALPA continue their protectionist tirade to prevent the launch of Virgin America, they have largely ignored Virgin America’s sweeping financial, managerial, contractual, and structural changes. The record here is now complete and ripe for action because once concerns were raised in the Department’s Tentative Decision, Virgin America and its investors went above and beyond statutory and regulatory requirements to conclusively demonstrate not only that the application meets the statutory ownership requirement, but that it is under the control of U.S. citizens. To their credit, certain legacy carriers like United, Northwest, and now even Continental, have fallen silent in their opposition in the docket and have apparently decided to compete in the marketplace, not governmental corridors. Notably, no low cost carrier has filed in opposition to Virgin America’s application. Additionally, over 71,000 letters in support of Virgin America’s application have been submitted to the White House, the DOT, Members of Congress, and governors around the country. Virgin America respectfully requests that the Department issue forthwith a Final Order approving its application for a certificate of public convenience and necessity to engage in interstate scheduled air transportation. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
March 14, 2007 Information on Board of Directors Vice-Chairman On behalf of Virgin America, Inc., we are submitting information on Secretary Samuel K. Skinner, the Vice-Chairman of the Board of Directors of Virgin America, as required under 14 C.F.R. 204. Secretary Skinner’s appointment was approved by the Board of Directors on February 1, 2007. Virgin America’s submission of information on Secretary Skinner does not alter the compliance information provided in sections (l), (m), (o), (p), and (q) of Exhibit 1 to its December 8, 2005 Application for a Certificate of Public Convenience and Necessity. Included with this letter is brief biographical information on Secretary Skinner along with a copy of his resume. We have provided a copy of this letter and the attachments to the opposing parties. Counsel: Pillsbury Winthrop, Jennifer Trock, 202-663-9179, jennifer.trock@pillsburylaw.com
Order 2007-3-16 Issued and Served March 20, 2007 Order to Show Cause - Bookmarked | Word By Order 2006-12-13, issued December 27, 2006, the Department tentatively found that the applicant, Virgin America, Inc. had failed to establish that it was a U.S. citizen and that it would be owned by and remain under the actual control of U.S. citizens. In response to that finding, Virgin America filed a substantially revised application proposing material changes in its financial arrangements, its management, and its corporate governance. Although our decisions on air carrier fitness look at the “totality of the circumstances” surrounding the applicant, and not any single factor, it is quite apparent from the record that Virgin America has either made or offered to make fundamental and highly constructive changes in its application. These modifications, when complemented by certain additional conditions we propose to include, now support a tentative finding that the applicant can meet our stringent tests for citizenship. Our review shows, however, there do remain a few areas where the revised application, as proposed by Virgin America, still falls short of the rigorous standards we apply in determining whether U.S. interests have “actual control” of the airline. Therefore, we are proposing to stipulate further conditions that the applicant must accept (or persuade us not to require) before making its certificate authority effective. Based on our review of the amended record of this case we now tentatively find that Virgin America will be a citizen of the United States, will be fit, willing, and able to provide interstate scheduled air transportation of persons, property, and mail, and should be issued a certificate of public convenience and necessity authorizing such operations, subject to conditions. As is our normal practice, we will provide interested parties 21 days to comment on our tentative findings and conclusions here. By: Andrew Steinberg
March 21, 2007 American Airlines Does Not Intend to File Objections American Airlines does not intend to file objections to show-cause Order 2007-3-16, March 20, 2007, tentatively granting the application of Virgin America for a certificate of public convenience and necessity. Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
April 10, 2007 Motion for Confidential Treatment Virgin America, Inc. hereby files this Motion for Confidential Treatment for portions of its Comments to the Department's Order to Show Cause (March 20, 2007) in the above-captioned matter, which is attached hereto in a sealed envelope and marked in accordance with Rule 12. Virgin America's Comments include sensitive business and financial information relevant to the Department's review of VX's Application. Public disclosure of this information would cause substantial harm to VX's competitive position by disclosing details of these otherwise-confidential arrangements. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
April 10, 2007 Comments of Virgin America - Bookmarked Virgin America, Inc. welcomes the Department's tentative approval of its application for a certificate of public convenience and necessity in its Order to Show Cause dated March 20, 2007 and respectfully urges the Department to proceed to issuance of a Final Order granting its application at the earliest possible time. Virgin America respectfully submits that the record before the Department abundantly demonstrates that it meets the Department's most "stringent tests for citizenship," and establishes that it is "fit, willing, and able" to perform interstate air transportation. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
April 10, 2007 Association of Flight Attendants Intends to File Comments | Word The Association of Flight Attendants-CWA plans on filing objections to Department of Transportation Order 2007-3-16. AFA-CWA intends to file objections 7 business days from today. By: AFA-CWA, Christopher Witkowski, 202-434-0596
April 11, 2007 The AFA through its letter seeks to delay a final decision in a proceeding that has been before the Department for more than 15 months. As the Department stated in its Order, "If no substantive objections are filed, we will issue an order that will make final our tentative finding and conclusion with respect to Virgin America's fitness and certification." AFA has failed to file any objections within the deadline, and the Department should accordingly strike the letter, as well as any objections that AFA may attempt to file at a later date, particularly if styled as an "Answer" or as 'Objections' to the Order issued on March 20, 2007. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com
April 16, 2007 Confidentiality Affidavits of Association of Flight Attendants-CWA
April 19, 2007 Answer of the Association of Flight Attendants-CWA
There is absolutely no evidence in the record about how an independent U.S. carrier applicant may have structured its operations, because no such entity ever existed. The decisions have been made for Virgin America by the Virgin Group. The managers acting for the prohibited foreign interests may well have made very good commercial decisions. Undoubtedly, that is what the passive U.S. investors that the Virgin Group recruited believe to be true. The Virgin Group business plan - the licensing agreement, the code-share agreement, all the commercial transactions --are still in place even if a few of their terms have undergone minor revision. The affairs of Virgin America are still structured so the carrier is in golden handcuffs intricately crafted by foreign carrier interests. But handcuffs nonetheless. The foreign progenitors of this structure stand to profit not only from their investment in Virgin America, but also the revenues that they have impermissibly caused to be directed to their commonly controlled foreign air carriers and marketing entities. This is precisely what the prohibition on foreign control of U.S. air carriers was designed to prevent, and why the application of Virgin America Inc. must be denied. Counsel: Susan Jollie, 703-354-8450, sjollie@verizon.net
April 20, 2007 As AFA candidly noted in its "Contingent Motion," AFA "has not been an active participant in this proceeding," throughout the more than fifteen months it has been ongoing. In terms of proffering "good cause" for its belated filing, AFA' s only excuse is that it "heretofore relied on other parties with complementary interests," and "had reason to believe that timely objections reflecting AFA's concerns were going to be filed by another party." Yet, "hoping" for surrogates to make your case does not constitute "good cause" for ignoring the very clear provisions of a Departmental procedural order. Counsel: Virgin America and Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
April 23, 2007 Answer of Association of Flight Attendants-CWA - Corrected | Word Please accept a Corrected Version of the Answer of the Association of Flight Attendants-CWA, which was filed on April 19, 2007. I am new to the DOT filing procedures, and thought that the Answer and an accompanying Contingent Motion had to be filed in Adobe Portable Document Format. A copy of the Answer in Microsoft Word format was transmitted to AFA-CWA by outside counsel at 4:34 p.m. on Thursday, April 19, 2007. In the process of converting the document, some formatting and typographical errors were introduced. This is the document that was submitted on April 19, 2007. The attached Corrected Version corrects typographical errors, word omissions, and other minor changes that do not affect the substance of the pleading that was filed on April 19, 2007. It took some time to convert from the Word format to PDF, so that although the Motion and Answer were ready to electronically file into DOT Docket 23307 before 5 P.M. in Word format, the conversion delayed the filing until about 5:30 P.M. Counsel for AFA-CWA has made inquiries and, based on discussions with DOT personnel, she has advised that the Contingent Motion to File an Unauthorized Document requesting leave to file on April 19, 2007 would be interpreted to include a filing after 5:00 P.M. that was received by the Department on April 19, 2007. Counsel: AFA-CWA, Christopher Witkowski, 202-434-0593, cwitkows@cwa-union.org
April 19, 2007 Answer of Association of Flight Attendants-CWA - Corrected | Word There is absolutely no evidence in the record about how an independent U.S. carrier applicant may have structured its operations, because no such entity ever existed. The decisions have been made for Virgin America by the Virgin Group. The managers acting for the prohibited foreign interests may well have made very good commercial decisions. Undoubtedly, that is what the passive U.S. investors that the Virgin Group recruited believe to be true. The Virgin Group business plan – the licensing agreement, the code-share agreement, all the commercial transactions -- are still in place even if a few of their terms have undergone minor revision. The affairs of Virgin America are still structured so the carrier is in golden handcuffs intricately crafted by foreign carrier interests. But handcuffs nonetheless. The foreign progenitors of this structure stand to profit not only from their investment in Virgin America, but also the revenues that they have impermissibly caused to be directed to their commonly controlled foreign air carriers and marketing entities. This is precisely what the prohibition on foreign control of U.S. air carriers was designed to prevent, and why the application of Virgin America Inc. must be denied. Counsel: Susan Jollie, 703-354-8450, sjollie@verizon.net
April 4, 2007 Ex-Parte Letters to:
Please be advised that by Order 2007-3-16, served March 20, the U.S. Department of Transportation issued a show-cause order tentatively finding Virgin America fit to conduct its proposed operations. As you may know, on December 27, 2006, the Department tentatively found that Virgin America’s original application failed to meet the citizenship test. In response to OUT December order, the company amended its application, proposing substantial and material changes in areas that the Department had cited as concerns. Because of these proposed changes, the Department issued a subsequent tentative decision finding that Virgin America will be a citizen of the United States; will be fit, willing, and able to provide its proposed operations; and should be issued a certificate of public convenience and necessity authorizing such operations, subject to it executing fully its proposed changes. In addition, the Department is tentatively imposing various conditions in order to ensure that Virgin America will meet current standards for defining control by U.S. citizens. Interested parties were given 21 days to file objections to the Department’s proposed decision, with answers to objections due 7 business days thereafter. The Department will give full consideration to any objections and answers received before taking any final action in this proceeding. By: Mary Peters
April 30, 2007 Air Gumbo, Inc. supports the Department of Transportation granting the applicant, Virgin America, Inc., tentative order to show cause. However Air Gumbo Inc. believes that the Department must stand firm in its determination that Mr. Fred Reid has to go. Mr. Reid, a seasoned airline executive, knew or should have known of the U.S. citizenship requirement to operate a domestic airline. Air Gumbo Inc. believes that the Department had properly found that the relationship between Mr. Reid and Sir Richard Branson was sufficient to deem Mr. Reid a non-U.S. citizen. To allow Virgin America to retain Mr. Reid would clearly contradict the citizenship requirement. Virgin America claiming that its strategic survival depends on Mr. Reid serving as CEO, or in any other employment capacity, implies that that fiduciary relationship between Mr. Reid and Sir Branson will always be vital. Furthermore, Virgin America undertook that inherently risky conduct when it filed its application with the Department as a non-U.S. citizen, so for them to cry now makes one wonder if Virgin America really wants to enter and compete in the U.S. market, or whether they are simply attempting to manipulate the Department. If Virgin America wants to keep Mr. Reid, then the starting-up airline would need to change its name, as the organization said it would willingly consider doing in order to be allowed to enter the U.S. market. Counsel: Air Gumbo, Ralston Champagnie, 337-781-0034. ralston@airgumbo.com
Order 2007-5-11 Issued and Served May 18, 2007 Final Order - Bookmarked Based on the record of this case, we here confirm and make final our tentative findings in Order 2007-3-16. Specifically, we find that Virgin America will be a U.S. citizen and will be fit, willing, and able to engage in interstate schedulcd passenger air transportation, following implementation of conditions. Virgin America has asked the Department to either remove in its entirety or amend our proposed condition regarding Mr. Reid’s employment with the company. Air Gumbo supports our tcntative finding that Virgin America rnust terminatc Mr. Reid’s employment. We agree that such a condition is necessary to ensure that U.S. citizens will control Virgin America. We find that Virgin America’s replacement of Mr Reid as CEO and board member with a U.S. citizen who has no prior affiliation with the Virgin Group would, with the other VAM changes and implementation of our proposed conditions, remedy our concerns over the indcpendcnce of the applicant’s management from the Virgin Group. We recognize and are mindful, however, that the replacement of a company’s CEO is difficult. For this reason, we have decided to condition certification of Virgin America on Mr. Reid’s replacement as CEO no later than six months after the issuance of a Final Order. Moreover, if the company wishes to retain him as a consultant to facilitate further an orderly transition, we would permit Mr. Reid to remain as a consultant for up to three months following his replacement as CEO, Mr. Reid’s total transitional pcriod will thus remain no more than nine months, as originally proposed in our Order to Show Cause. Because no new arguments have been presented to convince us that our tentative findings in Order 2007-3-16 should not be made final, we find that Virgin America will meet our citizenship requirements. By: Andrew Steinberg
July 17, 2007 Association of Flight Attendants-CWA Petition for Court Review of Order 2007-5-11 - Ninth Circuit Court of Appeals Counsel: Susan Jollie, 703-354-8460, sjollie@verizon.net
Order 2007-8-17 Issued and Served August 17, 2007 Order Confirming Oral Actions and Issuing Effective Certificate We confirm our oral action of July 11, 2007, granting Virgin America Inc., a waiver of the pre-operational ticket sales prohibitions of 14 CFR 201.5 to allow it to issue tickets and accept payments from prospective passengers prior to receiving effective Department authority. We confirm our oral action of August 7, 2007, making the section 41102 interstate scheduled certificate authority issued to Virgin America Inc., effective on that date. We reissue to Virgin America Inc., the interstate scheduled section 41102 certificate issued to it by Order 2007-5-11 in the attached form to reflect its effective date. By: Andrew Steinberg
September 12, 2007 Confidentiality Affidavit for Association of Flight Attendants-CWA - Alan Schneider
OST-2007-29229 - Exemption or Modification of Order 2007-5-11 September 14, 2007 Answer of Association of Flight Attendants-CWA | Word The Association of Flight Attendants-CWA opposes the request for exemption or alternative form of regulatory relief to permit Frederick Reid to continue serving as President of Virgin America. AFA believes that the Department erroneously concluded that conditions that were placed on the corporate governance of VAI were sufficient to enable Virgin America to qualify for a U.S. air carrier certificate notwithstanding the earlier conclusion that VAI was impermissibly controlled by foreign citizens. An element of that initial adverse determination was that Frederick Reid was tainted by his recruitment and involvement with the Virgin Group. From this request and other recent events, it is evident that Sir Richard Branson and VAI intend to stretch the boundaries beyond what VAI represented to the Department to secure its certificate. AFA also objects to VAI’s Motion for Confidential Treatment. In this and other pleadings in these proceedings, VAI has asserted confidentiality for statements or documents that contain no trade secrets or only marginally sensitive commercial information. Because VAI has repeatedly abused the procedural rules for confidential treatment, even vague descriptions of the contents of these documents in pleadings and DOT Orders have been veiled in confidentiality that is not merited. Counsel: Susan Jollie, 703-354-8450, SJollie@verizon.net
February 10, 2009 Petition of Alaska Airlines - Bookmarked Alaska Airlines respectfully requests that the Department immediately open up for public scrutiny and comment any on-going Virgin America continuing fitness investigation or initiate a formal public investigation into the continuing citizenship of Virgin America. Alaska brings this request in the interest of ensuring that a level competitive playing field exists. Many aspects of Virgin America's structure and operations have clearly changed since the issuance of its certificate. There is, however, a paucity of public information about those changes. Alaska is obliged to rely on media reports in commenting on Virgin America's current situation. Alaska brings this request for a simple reason: to ensure all U.S. carriers are held to the same standard of compliance with longstanding U.S. ownership and control laws. Alaska must mould its operation to comply with these laws. Virgin America should be no exception. If Virgin America is not in compliance, this places law-abiding airlines at a competitive disadvantage, because they cannot attract and deploy the same level of capital from non-U.S. citizens. Alaska appreciates that some have sought to change the U.S.' ownership and control restrictions; however, unless and until such change occurs, even-handed enforcement of current restrictions is essential - particularly in the current financial environment - to ensure a level competitive playing field for all U.S. carriers. Counsel: Squire Sanders, Marshall Sinick, 202-626-6600
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger
February 20, 2009 Answer of Air Line Pilots Association The Air Line Pilots Association supports the request of Alaska Airlines, Inc. to open up for public examination and comment any continuing fitness review of Virgin America or to initiate a formal public investigation into Virgin America's citizenship status. Recent capital infusions into the airline and press reports that the airline's largest U.S. stockholders are seeking to divest their holdings raise serious questions about the extent of control exercised over Virgin America by its founding father -- the British Virgin Group. As Alaska points out, Virgin America has been losing money at a rapid rate since beginning operations in August 2007. Moreover, as Alaska asserts, the airline would likely have run out of money last year had it not received loans for $112 million. While the source of the loans has not been disclosed, news accounts suggest that they were at least in part from a British investor. Counsel: ALPA, Russell Bailey, 202-797-4086
February 20, 2009 Answer of Virgin America to Petition of Alaska Airlines The recent, nearly 18-month long process to establish Virgin America’s citizenship faced opposition by virtually every major carrier except Alaska. Now facing robust and effective competition on its Seattle to Los Angeles/San Francisco routes from a new low-fare, innovative competitor, Alaska is belatedly seeking to revisit the Department’s citizenship determination, rather than devoting its resources to competing with Virgin America in the marketplace. In making its extraordinary request for yet another public proceeding to confirm Virgin America’s citizenship, Alaska points to no evidence of any change in facts or law that would justify reopening the exhaustively reviewed certification proceeding, nor can it point to any relevant legal precedent that supports its position. Instead, it cites to unsubstantiated “media reports” and does just what Virgin America predicted its competitors would when the Department unfortunately chose to make Virgin America’s financial and traffic information public: inaccurately use such information as a weapon to urge governmental officials to shut down Virgin America’s innovative and needed services and competition, even though Virgin America fully complies with U.S. law. The Department should deny Alaska’s unfounded request for a continuing fitness investigation of Virgin America, which underwent the most extensive and expensive citizenship review in the Department’s history. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger February 20, 2009 Petition of Aircraft Mechanics Fraternal Association From the outset, Virgin America's ownership structure was suspect and controversial. The carrier eventually met the reasonable demands the Department made to attain the status of U.S. citizenship. Virgin America has recently encountered serious financial difficulties, which have raised the significant possibility that its principal owners will exercise puts regarding their shares, thus turning control of the carrier over to the Virgin Group, a foreign entity not authorized to own and manage a U.S. carrier. Therefore, it is imperative that the Department conduct a full and open review of Virgin America's fitness to continue operating as a U.S. carrier. Counsel: Seham Seham, Lee Seham, 914-997-1346
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger February 20, 2009 Answer of Association of Flight Attendants-CWA in Support of Petition of Alaska Airlines Judgments that are made in the initial certification proceeding necessarily draw on the information presented at the time. It is difficult to predict future conduct and the Department has tended to give applicants the benefit of the doubt. In its First Show Cause Order 2006-12-23, DOT identified a number of factors that contributed to its initial assessment that Virgin America was not controlled by U.S. citizens, including the structure of the U.S. citizen hedge fund investors (VA!), Virgin America's reliance on VG's initial financing and indebtedness to VG, and contractual and business relationships that caused DOT to question the independence of the U.S. citizen owners. The Department then indicated that it would accept changes proffered by the applicant as establishing Virgin America's independence from foreign influence. But the validity of this assessment ultimately depends upon the parties' subsequent conduct. Counsel: AFA and Susan Jolie, 703-354-8450
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger March 12, 2009 The Wall Street Journal of March 10, 2009 reported that the British Virgin Group has now repurchased and owns virtually 100 percent of Virgin America’s voting securities. This development significantly adds to the urgency that the Department take immediate steps to address the fact that, as of some time last week, Virgin America ceased being a U.S. citizen and may therefore not continue to claim U.S. carrier status. It would be difficult to understate the legal ramifications of Virgin America’s two U.S. private equity funds putting the entirety of their respective equity investments back to the Virgin Group. The Department should not allow the retention of cosmetic voting rights by the two U.S. private equity funds to be treated as the equivalent of voting stock ownership as required by the statute. Indeed, the Department and its predecessor have long held that analogous voting trusts may not be used to satisfy the wellunderstood statutory ownership requirements. In light of the heightened urgency surrounding this substantial new development, Alaska now urges the Department to move to issue a show cause order tentatively finding that Virgin America no longer qualifies as a U.S. citizen. The significance of the Virgin Group’s repurchase and payment for virtually 100 percent of Virgin America’s stock has overtaken Alaska’s earlier request that the Department initiate a public inquiry into whether Virgin America continues to qualify as a U.S. citizen. The Virgin Group’s repurchase sometime last week has eliminated any credible basis on which to claim Virgin America still remains a U.S. citizen – an unprecedented statutory violation which only becomes worse with each passing day. Alaska in fact is unaware of any similar circumstance in which the ownership of the stock of a carrier of comparable size has been so clearly called into question. Counsel: Squire Sanders, Marshall Sinick, 202-626-6600 OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger
March 23, 2009 Answer of Air Line Pilots Association to Reply of Alaska Air and Motion for Leave to File Virgin America seems to be saying that having the hedge funds continue "to hold" their voting shares even though they no longer have a financial investment in the company is sufficient for citizenship purposes. But if this is to be taken as an assertion that the funds thereby continue to have ownership in -- much less control over -- Virgin America, such an assertion would fly in the face of forty years of DOT and Civil Aeronautic Board case law on ownership as well as "actual control." Indeed, the assertion would be at odds with DOT's analysis in this very proceeding. In the first show cause order DOT found that the hedge funds did not meet the statutory definition of a U.S. citizen because each had a significant portion of its total equity held by foreign entities. Order 2006-12-23. Virgin America attempted to meet this objection by proposing to segregate the foreign investors in the hedge funds so that they were excluded from participating in any profits or losses of Virgin America: in other words, they would be excluded "from receiving any benefit/risk related to their investment in Virgin America." Order 2007-3-16. The Department found that this proposal-- which purportedly "walled off" the foreign investors from participation in Virgin America -- was adequate to permit DOT to determine that the foreign investors did not have sufficient interest in Virgin America to disqualify the hedge funds on citizenship grounds. The same analysis should apply here. The hedge funds now appear to have walled themselves off from any beneficial interest in Virgin America. They, like the walled off foreign investors, should be deemed "not to count" for citizenship purposes. Reduced to its essence, the assertion that the hedge funds should continue to count for actual control purposes even if they have no benefit or risk associated with their stock "holdings," would invite, as Alaska has so aptly put it, the institution of a "rent-a-citizen" regime where any level or form of foreign investment and perhaps management participation is acceptable so long as U.S. citizens nominally retain physical possession of the stock certificates along with the right to vote 75 percent of a carrier's voting shares, even though such U.S. citizens have absolutely no meaningful interest in the economic performance of the carrier. Counsel: ALPA, Russell Bailey, 202-797-4086
March 23, 2009 Answer of Association of Flight Attendants-CWA and Motion for Leave to File Virgin America has insinuated that DOT has already approved confidential documents in the certification proceeding that it asserts preserve U.S. citizen control upon exercise of the Put Agreement. Media reports, no doubt by design, provide very little insight into the factual and legal basis for suggesting that DOT has concluded that Virgin America remains a U.S. citizen. AFA has reviewed all the documents that were submitted in conjunction with Virgin America's initial certification, and specifically the provisions that relate to voting rights. There is no mechanism to satisfy the legal requirement that Virgin America remain at all times under the ownership and actual control of U.S. citizens as defined under DOT precedent. The Association of Flight Attendants-CWA respectfully requests that the Department of Transportation: (1) immediately make available to all interested persons copies of all confidential materials that were submitted in the proceeding in DOT Docket OST-2005-23307, including specifically those provisions on which Virgin America relies to support its assertion that Virgin America is a U.S. citizen, with only appropriate redactions of documents consistent with the President's Memorandum for the Heads of Executive Departments and Agencies, dated January 21, 2009; and (2) immediately initiate a public proceeding with a Show Cause Order tentatively finding that Virgin America, Inc. is not a citizen ofthe United States as required by statute and DOT precedent. Counsel: Susan Jollie, 703-354-8450
March 24, 2009 Answer of Virgin America to Motion of Alaska Airlines Alaska has raised nothing new in its Motion, and just like in its initial Petition, no reason to institute a public proceeding exists. Nothing unforeseen to the Department has occurred, and Virgin America has met and continues to meet all of its notification requirements. Consistent with Department precedent, the Department should not institute a public proceeding where an informal review is more appropriate. Nor should it issue a Show Cause Order to ultimately ground a rapidly expanding, competitive, and innovative U.S. carrier that currently employs over 1,400 people nationwide. Alaska has demonstrated that it can do no more than tell the Department what has been publicly reported in the press, but has not otherwise provided any basis to justify either its initial Petition or its subsequent Motion. Counsel: Virgin America and Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger April 2, 2009 Re: Oberstar Letter to Secretary of Transportation Ray LaHood I am writing to you concerning questions that have arisen regarding the citizenship of Virgin America, Inc. and, in particular, the report in the March 10, 2009, Wall Street Journal that the U.S. private equity funds that own the majority of Virgin America's voting stock have transferred all financial interest in their shares to tbe British-based Virgin Group. If these reports are accurate, it calls into question whether Virgin America continues to meet the requirements for holding a certificate as a U.S. air carrier. If the equity funds have no further stake in the success of the company, there is a serious question as to whether their continued title to the shares is sufficient grounds for them to be considered as the owner of the stock, for purpose of the statutory requirement that a U.S. carrier must have 75 percent of its voting stock owned or controlled by persons that are citizens of the United States. If the Virgin Group has all of the financial interest in tbhe stock, it would seem to be tbe owner for purposes of the citizenship requirement. Several groups, including Alaska Airlines, have asked the Department of Transportation to hold a public inquiry to examine whether Virgin America can still be considered a U.S. citizen. I fInd it signifIcant that in its answers opposing these petitions, Virgin America does not deny that there has been a sale or other transfer of financial interest in the stock. If Virgin had been able to make this denial, it presumably would have done so, since this would be a strong, if not irrefutable, argument for denial of the requests for an investigation. The Department should undertake a comprehensive review of the accuracy of the reports that the U.S. private equity funds have sold or otherwise disposed of all financial interest in their shares in Virgin America. If the Department finds that the equity funds have disposed of their financial interest, then I strongly urge the Department to conduct a public proceeding to examine the question of Virgin America's citizenship. By: James Oberstar
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger August 21, 2009 Renewed Motion of Alaska Air for a Public Proceeding Almost six months have passed since Cyrus Capital Partners L.P. and Black Canyon Capital LLC, the two U.S. hedge funds holding 75 percent of Virgin America’s voting stock, exercised puts that surrendered back to the British Virgin Group all of the economic rights traditionally associated with being a shareholder. Alaska Airlines is of the view that Virgin America has lost its status as a U.S. carrier and has therefore been operating illegally ever since these rights were exercised. It also appears, based on the limited publicly available information and the absence of any statement to the contrary, that the Department now considers voting rights stripped of any economic interests to satisfy U.S. citizenship requirements or has provided Virgin America a “grace period” in which to find replacement U.S. investors. Either scenario raises difficult statutory and policy issues. Alaska therefore renews its request for a public review of Virgin America’s current and prospective citizenship status.
Alaska is not alone in its concerns. Two aviation leaders in Congress - Senator Patty Murray, Chairperson of the Senate Transportation, Housing and Urban Development, and Related Agencies Appropriations Subcommittee, and Congressman James Oberstar, Chairman of the House Transportation and Infrastructure Committee - have also called for the Department to address Virgin America’s apparent non-compliance with U.S. citizenship and ownership requirements. Counsel: Squire Sanders, Marshall Sinick, 202-626-6600
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger July 28, 2009 Re: Ex-Parte Letter to Senator Patty Murray (D-WA) By: Roy Kienitz
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger August 31, 2009 Answer of Aircraft Mechanics Fraternal Association in Support of Renewed Motion of Alaska Air The Aircraft Mechanics Fraternal Association files this Answer in support of the Renewed Motion of Alaska Airlines, Inc. requesting that the Department of Transportation open to the public its continuing review of Virgin America's status as a U.S. citizen. As Alaska points out in its Renewed Motion, dated August 21, 2009, serious questions have lingered for years concerning the ownership and actual control of Virgin America. Counsel: Seham Seham, Lee Seham, 914-997-1346
September 1, 2009 Answer of Air Line Pilots Association in Support of Renewed Motion of Alaska Air The Air Line Pilots Association supports the renewed request of Alaska Airlines, Inc. to open up for public examination and comment the Department's ongoing review of Virgin America's citizenship status. As Alaska rightly observes, recent press reports suggest that changes to Virgin America's ownership structure raise fundamental questions about its ownership status. Those reports suggest that the airline's largest U.S. "stockholders" now bear no risk of loss with respect to their holdings. Since "risk of loss is an integral aspect of a genuine ownership interest," if the reports are true, the stockholders are not genuine owners within the meaning of the Department's historic interpretation of the U.S. citizenship requirements for air carriers. See Order to Show Cause 2007-3-16. As a result, Virgin America should no longer qualify as a U.S. citizen under the law. Counsel: ALPA, Russell Bailey, 202-797-4086
September 1, 2009 Answer of Association of Flight Attendants-CWA in Support of Renewed Motion of Alaska Air The Association of Flight Attendants-CWA answers in support of the Renewed Motion of Alaska Airlines, Inc. for a Public Proceeding to examine the continuing fitness of Virgin America, Inc., which is under the influence of Sir Richard Branson and his Virgin Group affiliates. Ample evidence has been provided over the last 6 months to support the inference that VA no longer satisfies-if it ever did-the statutory requirement of U.S. citizenship. Counsel: Susan Jollie, 703-354-8450
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger September 1, 2009 Answer of Virgin America to Renewed Motion of Alaska Air Alaska’s Renewed Motion offers nothing new for the Department to consider. Virgin America continues to comply with U.S. law regarding its citizenship. The latest Alaska filing is merely a reiteration of its earlier arguments for a public proceeding - arguments that continue to rely on inaccurate facts and mischaracterizations of Department precedent in continuing fitness and citizenship matters, including the Department’s order granting Virgin America its certificate (See Order 2007-8-17, issued August 17, 2007). Alaska’s renewed motion should be recognized and dismissed for what it is: political and public posturing designed to do nothing more than make a headline and attempt to harm a new competitor that has won numerous awards for its innovative and industry-leading service and product. Indeed, given the lack of any new or substantive issues raised by Alaska or others, Virgin America respectfully requests that the Department close the docket on this matter and deny Alaska’s multiple petitions. In its latest effort, Alaska repeats it circular argument that it cannot demonstrate the need for a public proceeding because of the confidential nature of the Department’s standard informal process, and that therefore the Department should institute a public proceeding and release Virgin America’s confidential information. However, Alaska’s request has no more basis in Department precedent now than it did when it first made this argument in February. Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger September 4, 2009 Answer of Transport Workers Union of America in Support of Renewed Motion of Alaska Air TWU has reviewed Alaska's Motion and fully agrees with Alaska that further examination of the citizenship status of Virgin America is warranted. As Alaska's Motion points out, publicly reported events, if correct, raise serious questions whether Virgin America satisfies U.S. carrier ownership requirements. As a result, an appraisal of Virgin America's ownership situation (or any contemplated new ownership situation) needs to be conducted and Alaska's Motion should be granted. TWU only became aware of this proceeding in recent days and required until today to complete its internal clearance processes. And since this matter has been pending since March, no interested party will be prejudiced by the TWU's late filing. Accordingly, good cause exists for the Department's acceptance of the TWU's answer. Counsel: David Rosen, 212-259-4900
Order 2010-1-5 Issued and Served January 8, 2010 On February 10, 2009, Alaska Airlines, Inc. filed a petition to institute a public inquiry into the citizenship of Virgin America, Inc. Specifically, the air carrier “move[d] the Department to immediately initiate an investigation into Virgin America’s citizenship and to conduct that investigation on the public record.” Alaska cites various changes in Virgin America’s structure and capitalization, and argues that such an investigation should be conducted with formal, public procedures to ensure greater transparency. On February 20, 2009, the Aircraft Mechanics Fraternal Association filed a similar petition. Alaska filed a renewed motion on August 21, 2009, arguing that developments since its initial petition supported conducting a public investigation of Virgin America’s citizenship. We are not persuaded that the public interest requires us to institute a public proceeding in this matter. As petitioners acknowledge, it has long been the Department’s practice to conduct continuing fitness reviews informally. We have determined that an informal continuing fitness review is appropriate here. We have completed such a review of Virgin America’s fitness, and have concluded that Virgin America remains a US citizen, subject to certain conditions. The Department has made public a detailed description of the Department’s review as well as its conclusions and the conditions imposed on Virgin America in a January 8, 2010, letter to the air carrier. By: Susan Kurland
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