Virgin America a no go????

[Zenfookpower]

................... By contrast their European rivals, who compete with US carriers on Trans-Atlantic routes, had to deal with the fallout from September 11th without any government assistance.

Ok.. what is the point.. Should the US government have helped your airlines or was it up to your own EU government to make the right decision..Why always attacking the US laws.. Learn to live with it as we all try do with the EU laws...
Happy New Year

[Mercutio]

^ My point was to respond to bkonner's claim that the US is the world's most open economy. When it comes to aviation the US is certainly not the most open and this protectionist decision on Virgin America is surely an example of that.

[CXRules]

According to the Heritage Foundation, the freest economy (or most open market) in the world is not the United States, it's Hong Kong.

Also, 911 took place in the U.S., in which air traffic was completely shut down for days by the government, in which it didn't happen anywhere else in the world. Thus, the aids to the American carriers are justified as some sort of compensation for their loses. Certainly, how much assistant to them by the government is another topic to debate.

I do think that it's more or less protectionism by restricting foreign ownership of U.S. carriers at 25% max. They certainly can up that amount to 49%.

[cageyjames]

According to the Heritage Foundation, the freest economy (or most open market) in the world is not the United States, it's Hong Kong.

True, but the USA is hardly closed.

http://www.heritage.org/research/featur ... reedom.cfm

[Mercutio]

^ Interesting that no less than six EU member states, including the UK (ranked 6th), are ranked as freer and more open economies than the US (ranked 11th).

[Zenfookpower]

^ Interesting that no less than six EU member states, including the UK (ranked 6th), are ranked as freer and more open economies than the US (ranked 11th).

Here we go again .. comparing EU member states with the USA.. Why not comparing EU member states with our USA states..
bkonner hit the nail on the head...there is your proof..

[cageyjames]

^ Interesting that no less than six EU member states, including the UK (ranked 6th), are ranked as freer and more open economies than the US (ranked 11th).

Technically the US is tied for 9th.

Seriously there isn't much difference between any of the EU countries (well except for FRA and ITA) and the US/Canada/Australia and NZ. Take a look at the rating number, not just where its ranking.

[Airliner_World]

A 25% cap on foreign investment in US airlines is nothing short of protectionism while most countries in the world have a cap of 49% or if you want a more liberal version look at Australia, a foreigner can own up to 100%.

The US is liberal in nearly every industry sector apart from aviation and the government and tax payers literally bailout US airlines for their incompetances through chapter 11 and any other disaster that occurs in the US.

Why would a foreigner invest in a US legacy airline where their investment will lose up to 40% or more once the airline seeks chapter 11 protection because they were complacent in applying their business plan. They go running to bankruptcy because they just aren't competitive enough for the industry and more competition drives fares down and increases efficiencies in the industry.

Personally if a foreign airline began operating domestic US flights, they would be more competitive than any US airline. Also, outsourcing is the future of the aviation industry whether people like it or not. That's life.

[cageyjames]

Personally if a foreign airline began operating domestic US flights, they would be more competitive than any US airline.

Unless that airline is Ryanair, I think not. US customers have voted with their feet for low airfare over luxury. The costs of having to create such a network from scratch here and compete against WN and B6 (let along US/UA/AA) would probably keep most from even trying. I'm sure we'd see BA and others fly to large cities, but the market place can't sustain small time operations from foreign airlines.

That said, I have no problem with more foreign ownership in the US airline market. Its all moot anyway, within 10 years we'll start seeing large mergers happen based on the alliance partnerships. UA/LH/AC/SQ/NH, AF/CO/US/DL/NW/KE, and AA/BA/CX/QF/JL. These would have already happened on a smaller scale if the EU and USA would allow such mergers. Don't say it will never happen because we are building up to this.

[Mercutio]

^ Interesting that no less than six EU member states, including the UK (ranked 6th), are ranked as freer and more open economies than the US (ranked 11th).

Here we go again .. comparing EU member states with the USA.. Why not comparing EU member states with our USA states.

Maybe because the the EU states are independent nations and because in this context the comparison would be irrelevent - the US restrictions on foreign ownership are determined at the national level - not by individual US states.

bkonner hit the nail on the head...there is your proof.

He hit the nail on what head exactly? Proof of what??

[Mercutio]

Unless that airline is Ryanair, I think not.

I'd prefer to let the market judge that. Too bad the market won't get a chance to decide! I personally think Branson's product would be similar to JetBlue's and would have a good chance of success.

[airDD]

The US aviation industry has these ownership rules because the government can order the US airliners to fly US army troops anywhere in the world. These would be hard to do with foreign owned airliners

airDD

[TexasGuy]

The US aviation industry has these ownership rules because the government can order the US airliners to fly US army troops anywhere in the world. These would be hard to do with foreign owned airliners

airDD

That has been stated over and over again on this forum. Some people just forget or dont wish to believe it.

[Mercutio]

The US aviation industry has these ownership rules because the government can order the US airliners to fly US army troops anywhere in the world. These would be hard to do with foreign owned airliners

That sounds like the sham justification for protectionism that it is....

[cageyjames]

I'd prefer to let the market judge that. Too bad the market won't get a chance to decide! I personally think Branson's product would be similar to JetBlue's and would have a good chance of success.

LOL, B6 can't compete against WN out west, what makes you think a startup could?

[Mercutio]

^ But JetBlue are not based out west are they? Virgin America will be. And Virgin America's product is slightly upmarket compared to Southwest's. Virgin America will appeal to cost conscious business travellers as well as the leisure market. EasyJet has found the same middle ground between Ryanair and BA (albeit closer to Ryanair....). It certainly works well for them. EasyJet carry more than 33 million pax pa and make strong profits. And at the end of the day it should be the market, not you, that judges whether Virgin America succeeds or fails. I for one think it would have a chance. The Virgin stable has decades of experience in the aviation industry and has produced profitable airlines all over the world. I am more convinced that they know their business than I am by your insistence that they don't. And even you must concede that this is irrelevant to the decision made by the courts. The courts never justified their refusal to award Virgin America a license on the grounds that their business model was flawed. And in any case many business models are flawed but they should be allowed to fly anyway (pun intended ). That's what choice, competition, and the free market are all about!

[cageyjames]

^ But JetBlue are not based out west are they? Virgin America will be.

They have not been able to compete in California. Only long haul routes to JFK.

And Virgin America's product is slightly upmarket compared to Southwest's.

As I said, price is the main driving factor in the USA. They can try but unless they are at the same price point as WN, they won't suceed out west. HP learned this and B6 has learned this and stayed out of the Western USA.

Virgin America will appeal to cost conscious business travellers as well as the leisure market.

WN dominates the leasure marketplace so that is out and cost concioius business travelers will stick with what they are using. UL and AA pretty much match WN out west so there isn't any wiggle room for VA. Plus both offer premium cross country flights that B6 or VA won't be able to match.

EasyJet has found the same middle ground between Ryanair and BA (albeit closer to Ryanair....). It certainly works well for them. EasyJet carry more than 33 million pax pa and make strong profits.

That is in Europe, not the USA.

And at the end of the day it should be the market, not you, that judges whether Virgin America succeeds or fails. I for one think it would have a chance.

At what cost to existing airlines? Do you wish to see Alaska, Frontier or ATA go away?

The Virgin stable has decades of experiance in the aviation industry and has produced profitable airlines all over the world.

The USA market is different.

I more convinced that they know their business than I am by your insistence that they don't.

Ask UA or WN about flying out of SFO. Both have given up because of the weather. If they were going to use a different airport I might give them a chance. They picked SFO because they won't have to compete against other low cost airlines. Once they leave that protected market, they'll be toast. Plus San Francisco already is used to taking BART to Oakland to take WN.

And even you must concede that this is irrelevant to the decision made by the courts. The courts never justified their refusal to award Virgin America a license on the grounds that their business model was flawed.

I've already said that they should allow more foreign ownership of airlines. How about Virgin invests in an existing airline instead of starting from scratch?

And in any case many business models are flawed but they should be allowed to fly anyway (pun intended ). That's what choice, competition, and the free market are all about!

And damn the consequences to existing companies.

[David747]

It seems Virgin America will not stop lobbying the government to allow it to operate in the US. With that being said, it would be interesting to see if the American government changes its mind, I hope they do. Despite the calls that competition is not needed, Virgin America will make things interesting in our market for sure.

[cageyjames]

Despite the calls that competition is not needed

How do you figure competition doesn't exist in the USA market for air travel? We've finally hit a balance were airlines are starting to make money again and employees are getting bonuses. So rather than build on this sucess, we'll go back to bankruptcy.

[Mercutio]

They have not been able to compete in California. Only long haul routes to JFK.

They are not based in California. Virgin America will be.

As I said, price is the main driving factor in the USA. They can try but unless they are at the same price point as WN, they won't suceed out west. HP learned this and B6 has learned this and stayed out of the Western USA.

Sorry but Ryanair is much cheaper than Southwest and yet EasyJet (which may also be cheaper than Southwest) have managed to compete with them and found space in the market between BA and Ryanair.

WN dominates the leasure marketplace so that is out and cost concioius business travelers will stick with what they are using.

You are too confident of your own forecasts. Have you ever run an airline? No. However Virgin have founded profitable airlines all over the world.

UL and AA pretty much match WN out west so there isn't any wiggle room for VA.

But Virgin American can take business from the established carriers. And neither United or American have California as their main base.

Plus both offer premium cross country flights that B6 or VA won't be able to match.

Why not? American and United have ageing fleets and union problems. I don't see them as being omnipotently competitive. Virgin Atlantic certainly takes them on over the Atlantic.

That is in Europe, not the USA.

So what? The model might succeed in the US too. Europe's aviation industry has become very innovative and competitive and EasyJet is an example of that. If Virgin replicate their model in the US then it will likely succeed.

At what cost to existing airlines? Do you wish to see Alaska, Frontier or ATA go away?

Like I said before I wish to see the market decide what airlines go away or succeed. If Alaska, Fronteir, ATA etc can't hack competiton from Virgin then they should go out of business. That's how competitive markets work to deliver the choice that customers want.

The USA market is different.

No it's not. Passengers want more or less the same things everywhere.

Ask UA or WN about flying out of SFO. Both have given up because of the weather. If they were going to use a different airport I might give them a chance. They picked SFO because they won't have to compete against other low cost airlines. Once they leave that protected market, they'll be toast.

Virgin Atlantic already use SFO and the Virgin stable operates profitable airlines in all manner of weather conditions all over the world.

Plus San Francisco already is used to taking BART to Oakland to take WN.

As I said before I think Virgin America will offer a differentiated product from Southwest.

I've already said that they should allow more foreign ownership of airlines. How about Virgin invests in an existing airline instead of starting from scratch?

How about Virgin being allowed to choose their own strategy?

And damn the consequences to existing companies.

Absolutely yes. That's a fundamental rule of free and competitive markets. The market chooses the winners and losers. Incumbants should not be protected from competition.


Sorry but your arguments are just thinly disguised justifications for protectionism.