>From The Economist; Mar 22 2007 FLYING THE FLAG Mar 22nd 2007 A domestic airline with foreign connections edges closer to launch WE WANT to change the way you fly, says Virgin America to its prospective American passengers. We want to change the way you are run, replies the Department of Transportation (DOT), which gave tentative blessing to the new airline on March 20th in return for a host of changes to its ownership and management structures. Rival carriers will doubtless contest the decision, but Virgin America is hopeful that it can begin operating domestic flights from its San Francisco home this summer. It has been a long haul. Virgin America's first application to fly, filed in 2005, failed the government's stringent citizenship tests for domestic airlines, which bar foreigners from owning more than 25% of the voting capital and from exercising practical control. Regulators had judged that Virgin Group, the empire of Sir Richard Branson, a British billionaire, would really be pulling the strings. To break the logjam, in January Virgin America proposed a series of changes to its structure, including dropping the number of board seats held by Virgin Group and putting the British group's voting shares into the hands of an American trustee. The airline also offered to remove its chief executive, Fred Reid, whose American citizenship failed to allay suspicions about his close ties to those perfidious foreigners. The concessions appear to have done the trick. DOT officials described the proposals as "fundamental and highly constructive" (although that did not stop them adding a few more stipulations of their own). American travellers should welcome the prospect of more competition. European passengers may also have gained. The news on Virgin America came just before European Union transport ministers approved an "open-skies" deal between America and the EU which leaves rules on foreign ownership of American carriers untouched. America's pledge to negotiate further on this issue may have seemed more credible because the door is now ajar for Virgin America. But others might see Virgin America's hard-won certification more as a demonstration of the high barriers to entry in America than as proof of their erosion. The DOT's objection to Mr Reid, a respected veteran in the industry, because he might be beholden to foreign interests looks particularly meddlesome. The delays in certification have also hurt the airline, which is now set to enter the market at a tough time, says Keith McMullan of Aviation Economics, a consultancy. Rival carriers are in better shape than a few years ago; the supply of aircraft and pilots is also much tighter. See this article with graphics and related items at http://www.economist.com/business/displaystory.cfm?story_id=8903391 - ABOUT ECONOMIST.COM - Economist.com is the online version of The Economist newspaper, an independent weekly international news and business publication offering clear reporting, commentary and analysis on world politics, business, finance, science & technology, culture, society and the arts. Economist.com also offers exclusive content online, including additional articles throughout the week. - COPYRIGHT - This e-mail message and Economist articles linked from it are copyright (c) 2007 The Economist Newspaper Group Limited. All rights reserved. http://www.economist.com/help/copy_general.cfm <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".