On 27 December 2006 Virgin America was advised that a tentative decision had been reached not to grant it a licence to operate domestic services within the United States on the basis that it was not considered to be under the actual control of US citizens. The company, which recently obtained the necessary US Federal Aviation Administration (FAA) safety certification and has been planning an SFO hub, has issued a media statement responding to the US Department of Transportation (DoT) "show cause" announcement (see also the Order and related documents).
Back in 1990 when the Virgin Group was looking to setup Virgin Blue in Australia and operate international air services to New Zealand similar issues about foreign ownership and control arose and the then Minister of Transport, Hon Mark Gosche, issued a media statement. Subsequently after it became Australian owned and controlled, Virgin Blue set up a 100% owned New Zealand company, Pacific Blue (NZ) Ltd, that qualifies as a SAM airline to operate trans-Tasman services. Christchurch-based Pacific Blue (NZ) does not, however, qualify to be designated as a New Zealand international airline so can only operate within the Australasian Single Aviation Market (SAM) under the Australia - New Zealand open skies air services agreement. Pacific Blue (NZ) therefore wet leases its New Zealand registered aircraft for services by Pacific Blue (Aust) Pty Ltd beyond New Zealand to its South Pacific destinations. Such services must orginate in Australia because Australia has not agreed to exchange seventh freedom passenger rights with New Zealand. Samoan airline Polynesian Blue (49% owned by Virgin Blue) also wet leases its aircraft from Pacific Blue (NZ).
In New Zealand, however, since 1986 as a matter of foreign investment policy - no reciprocity is required - it has be possible for foreign nationals to have 100% ownership and control of a purely domestic airline. Australia also subsequently changed its policy.
In the jargon what is permissable in New Zealand and Australia, but not in the United States, is called ninth freedom cabotage.
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