Virgin America denied

"The flying rights are critical to the Bay Area, this would be a huge loss. There’s an estimated 1,600 jobs locally, 3,000 nationwide at stake here. It will generate $140 million in salaries, $240 million in business revenue and $24 million in state and local taxes. ... It’s also estimated to generate $5 million to $10 million in local spending,” said Nagel.

Under federal law, a U.S. airline must prove that the president, two-thirds of the board of directors, and at least 75 percent of the voting interest are made up of U.S. citizens. The DOT questioned Virgin America’s close ties to the U.K. based Virgin Group. Virgin announced its plans to work with the DOT to accommodate the requirements and get planes in flight. Local agencies are hopeful an agreement can be made since the new company will mean more money and job opportunities for the area.

The tentative denial is based on a five-month review of the application and the licensing agreement for the Virgin name.

"Properly structured licensing or franchise agreements between U.S. and international carriers are now, and will continue to be, permissible,” according to a DOT press release.

The agreement will need to be restructured for Virgin to get the go-ahead to start flying.

"While we disagree with this tentative order, we respect the department’s decision and intend to use the order as a roadmap to address the issues raised and to demonstrate to the DOT that Virgin America will meet all ownership and control requirements,” Virgin America spokesman Gareth Edmondson-Jones said in a press release.

The company plans to respond on Jan. 10.

In the meantime, local officials are disappointed by the setback but eager to see the benefits of a locally based airlines begin.

"We hope the process can be expeditious because the airline will be very important in terms of jobs and revenue,” said Deputy Airport Manager Kandace Bender.

International traffic is at an all-time high out of San Francisco International, said Bender. Domestic flights, on the other hand, are down, she said.

One reason could be the lack of affordable domestic flight options out of the airport. Burlingame Mayor Nagel pointed out that discounted airlines such as Southwest and JetBlue both run out of Oakland and San Jose, but not San Francisco.

Virgin America considered many places before settling on basing its headquarters in California.

"This was not done in a vacuum. It was done in a concerted effort. To have the rug pulled out from under the effort strictly because of politics is unfortunate,” said Supervisor Hill.

Hill stressed the hundreds of millions of dollars the deal would mean annually for the county and state.

"It’s really outrageous. Unless there’s some technical error, this is pure and simple politics. The fact that a new, competitive airline comes into this country and meets all the requirements and can’t operate, that goes against every principle this country was based on,” he said.

Supervisor Mark Church echoed Hill’s concerns, adding that he hopes its a technical issue that can be resolved. Both Church and Hill pledged the county would help Virgin’s efforts if asked.

Heather Murtagh can be reached by e-mail: heather@smdailyjournal.com or by phone: (650) 344-5200 ext. 105. What do you think of this story? Send a letter to the editor: letters@smdailyjournal.com.