Comment by nonameface | Hacker News Reader

Comment by nonameface | Hacker News Reader

Parent Full thread

The rules and laws around this are interesting:

"The United States (U.S.) airline industry is unique among industries in being governed by federal statutes requiring air carriers seeking to be certified in the U.S. to be “owned or controlled” by a “citizen” of the U.S.1 This requirement is enforced by the Department of Transportation (DOT) performing “fitness reviews” on applicant airlines to ensure they meet the “citizenship” definition.2 Historically, the U.S. has limited ownership and control to U.S. citizens for four primary reasons: the protection of a fledgling U.S. airline industry, the regulation of international air service through bilateral agreements, concern about allowing foreign aircraft access to U.S. airspace, and military reliance on civilian airlines to supplement airlift capacity.3"

Of Particular interest to this Virgin America deal:

Voting equity up to 25 percent and nonvoting equity up to 49 percent by a foreign entity is allowed, and any equity above these levels must be held in trust or converted to debt. Foreign holdings will be counted cumulatively towards these totals. (page 24)

Source: http://dailyairlinefilings.com/public/furlan.pdf

Thank for listing the rational of why foreign ownership is treated differently for airlines than most other industries. Two of these reasons are difficult to overcome.

First the way international flight agreements are negotiated between countries. Changing this would essentially require all nations with airlines to agree to these changes at the same time. A difficult task. Maybe this is occurring within European Union context?

Second, most nations see their airlines as a source of transportation in times of national emergency. The government can demand that the commercial air fleet be used for the military (or other agencies). I believe that this has only occurred once in the USA, during the first Gulf War. In the USA, the government officially "contracts" with the airlines to provide their fleet on demand. Some have argued that these contracts are a hidden form of subsidy. In any case it is hard to see how any government will allow foreign ownership of airlines due to this military use.

More on Civil Reserve Air Fleet (CRAF) the US military use of airliners : http://fas.org/man/dod-101/sys/ac/craf.htm

Two of these reasons are difficult to overcome

Which two do you think are hard to overcome when considering a British national as a controlling owner? Looking at the list, the military reliance issue is the only one that seems concerning.

A significant part of the US heavy lift into Afghanistan was flown in Russian owned and operated An-124 cargo aircraft.

Participation in CRAF program has been voluntary (& fairly profitable) for the airlines. CRAF was activated twice, as part of Gulf War (1991) & Iraqi Freedom (2003). If the USAF was concerned about airlines "foreign control" during wartime, they'd go to the boneyard and grab extra C-5s and standard 747/767 passenger and freighter aircraft.

There are dozens of large aircraft in the boneyard that could be made serviceable in less 48-72 hours if rushed back to service. The aircraft may require heavy maintenance to stay in service long term, but still safe for short term operations. The downside is the USAF would have to pay for for the aircraft maintenance, whereas CRAF maintenance is paid by the operator.

Reply on news.ycombinator.com