Monday, January 11, 2010

Like a Virgin

They play hardball in the travel biz. Ask anyone at Virgin America, a San Francisco-based, low-fare, high-style airline that launched commercial passenger service more than two years ago - and hasn't stopped fending off legal challenges ever since.

I don't know if Virgin America - which licenses its name from minority owner Richard Branson's UK-based Virgin Group - ever truly expected a smooth ride, but if so, I imagine the carrier has lost its innocence by now.

First, the fledgling airline's application to the U.S. Department of Transportation to begin service was held up when several mainline U.S. competitors, led by Continental Airlines, charged it wasn't in compliance with U.S. laws that restrict foreign ownership of any U.S. airline to a minority share. The application was approved, but only after the airline jettisoned its founding CEO, Fred Reid, who the DOT thought was too close to Branson. Branson tapped Reid, a former Delta and Lufthansa executive, to get Virgin America off the ground. Virgin America's first flight finally took off in August 2007.

Then, in early 2009, the Alaska Air Group Inc., which operates Alaska Airlines, similarly charged that Virgin America was not U.S.-owned and controlled. After renewed deliberation, DOT ruled last week that it is, while prompting several changes in the stakes of investors and the appointment of the airline's current CEO, former American Airlines executive David Cush, to the board of directors. This expands the board to nine members from eight, with seven of the directors being U.S. citizens.

As if all that wasn't enough, U.S. aviation legend Chuck Yeager, the former aircraft-test pilot - a main figure in Tom Wolfe's book "The Right Stuff'' and the 1980s movie adaptation of the same title - has sued Virgin America. Yeager claims the airline used his name "maliciously, oppressively and fraudulently,'' in promotional material, according to Andrew S. Ross's The Bottom Line column in the Jan. 8 business section of the San Francisco Chronicle. Virgin America, according to the Chronicle, praised Yeager in passing in an e-mail sent to its frequent fliers to ballyhoo on-board Wi-Fi, which it has pioneered among U.S. airlines.

"Not unlike Buzz Aldrin or Chuck Yeager, you have the opportunity to be part of a monumental moment in air travel,'' the e-mail reads, as quoted in Ross's reporting. Yeager says the airline didn't ask permission to use his name, and is asking for "the revenue and profits'' derived from its use, as well as "exemplary and punitive charges.'' The Chronicle's headline on the column: "Yeager's Suit - the Wrong Stuff.''


Virgin America might prefer the exposure it will be getting on a new reality TV show, "Fly Girls,'' premiering on the CW network. "Fly Girls'' follows five young, not-average-looking female flight attendants who fly a lot and party a lot. The FAs work for Virgin America. That should be a boost to brand awareness.

As for Branson and foreign ownership, I can only say this: Most countries, convulsed by national security fears and worried about potential job losses, limit foreign ownership and control of their airlines. But, why? Business is global now, and the airline business is the main mode of transport for global commerce, especially travel and tourism. As much as any industry, civil aviation makes business more international than it's ever been. (I'll revisit this subject, and argue that such ownership rules are outdated and mercantilist, in another post.)

The British? Speaking as an American, I daresay the Brits haven't harmed the United States since they burned the White House during the War of 1812. You'd think we'd be over it by now. They're mainly a good lot. Of course, the British did give us Slade, Princess Di and Madonna faking a lady-of-the-manor English accent, so maybe it's OK to fear them after all. Probably not in aviation, though.

Virgin America, which flies to 10 U.S. cities and has ambitions to fly to 50, deserves a break. It's a good airline, a leader in in-flight technology, and a spur to much-needed competition in the U.S. domestic market. Allowing the airline to operate on that level playing field that everyone keeps nattering on about wouldn't be such bad thing.

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