Bloomberg is reporting that the US Department of Transportation has withheld approval for Virgin America to start service in the US pending adjustments to Virgin’s current ownership structure. US law limits foreign ownership to a maximum of 25% in airlines operating within the US domestic market.
Richard Branson’s Virgin Group Ltd proivided 25% of the initial $177 million investment to start Virgin, as well as a $53 million loan.
Several network US carriers have been lobbying Washington to block the launch of Virgin America. The mid-term elections and the change to a Democratic majority certainly didn’t help Virgin.
Virgin has 14 days to appeal this ruling.
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