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January 7, 2011

BY ELECTRONIC MAIL

Anne Suissa

Director

Office of Airline Information

Bureau of Transportation Statistics

Research and Innovative Technology Administration

U.S.Department of Transportation

1200 New Jersey Ave., S.E.

Washington, D.C.20590

Dear Ms. Suissa:

As discussed with you earlier today, Virgin America Inc. ("Virgin America") is

requesting a waiver from the otherwise applicable System of Accounts and Reports for

large certificated air carriers, 14 C.F.R. Part 241, as more fully described herein. Virgin

America respectfully su bmits that a grant of this waiver would be in the public interest.

Under the Department's reporting requirements (Sections 21-25 of the System of

Accounts and Reports), large certificated air carriers must regularly submit detailed onflight market and nonstop segment data as well as financial results to the Department, with

separate data reported for each applicable operating entity (Domestic, Latin America,

Atlantic and Pacific). Until last month, all of the markets served by Virgin America fell

within the "Domestic" operating entity and, therefore, Virgin America's traffic and financial

data have not been reported under separate operating entities.'

On December 16, 2010, Virgin America launched limited service to Mexico, with 5

weekly roundtrips in the San Francisco ("SFO")-San Jose del Cabo ("SJD") city pair. Virgin

America plans to introduce 5 weekly roundtrip flights in the Los Angeles ("LAX")-Cancun

("CUN") city pair and 3 weekly roundtrip flights in the SFO-CUN city pair beginning on

January 19-20, 2011.

These additional flights will, however, constitute only a very small fraction of Virgin

America's total scheduled flying. For example, Virgin America projects that it will operate

Although Virgin America serves Toronto, Canada, under the Department's regulations "the domestic

entity ... shall also include Canadian transborder operations." See Subsection 21(g).

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Anne Suissa

January 7, 2011

Page 2

no more than 12 roundtrip flights in the SFO-SJD market for the reportable December

2010 period, accounting for about 0.7% of its total capacity. Virgin America further

anticipates that, with. the addition of CUNservice, all of its Mexico flights will account for no

more than 2% of its total scheduled capacity for the reportable January 2011 period.

Furthermore, when measured on a quarterly basis, Virgin America projects that these

flights will account for only 2.7% of the carrier's total scheduled capacity for the three

month period ending on March 31, 2011.

Virgin America would ordinarily be required to separately report data for these

flights under the "Latin America" operating entity. However, and as set forth above, these

flights will be the only Virgin America operations that do not fall within the Domestic

operating entity. Asa consequence, the added cost to Virgin America of setting up an entire

set of separate accounting records for a Latin American entity that is only a very small part

of Virgin America's scheduled system clearly outweighs any benefits that will be provided

to the overall Latin American system of records compiled by the Department. Indeed, the

ASMsthat will be flown by Virgin America in the first quarter of 2011 in Mexico constitutes

only 0.3 percent of the ASMs reported by all other U.S. carriers in the first quarter of 2010

for their Latin American entities.

Turning to the criteria that must guide the Department in its review of this waiver

request under Section 1-2 of Part 241, Virgin America submits that these particular

circumstances warrant a departure from the otherwise applicable reporting procedures.

Operating and financial results for Mexico will constitute but a small portion of Virgin

America's total reportable data and, in any event, users of the Department's Form 41 data

will be able' to easily retrieve Virgin America's Mexico traffic statistics by segment specific

airports. As a consequence, the alternative method proposed by Virgin America (i.e.,

inclusion of the operating and financial results in the Domestic operating entity) win result

"in a substantially equivalent portrayal of operating results or financial condition,

. consistent with the principles embodied in the provisions of this system of accounts and

reports." ld. Moreover, the alternative procedure which Virgin America proposes will

effectively maintain the "uniformity in substantive results as between air carriers." Id.

Furthermore, it is not in the public interest for Virgin America to expend Significant

resources to set up an entirely separate set of accounting systems for such a limited

amount of information. Finally, it is Virgin America's understanding that similar waivers

have been granted to carriers in the past until their Latin American operations had grown

to the point that it was in the public interest to report that information as a separate Latin

American entity.

For the foregoing. reasons, Virgin America respectfully urges the Department to

grant its waiver to the extent necessary to allow the carrier to include operating and

555 Airport Boulevard T650. 762.7000

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Anne Suissa

January 7, 2011

Page 3

financial results for these very limited Mexican operations within the Domestic operating

entity.

Please contact me at 650-762-7108 if you have any questions related to this request.

Very truly yours,

.V'Jr::~;{- 1~~~'f·

Varley

Senior Vice President & eneral Counsel

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