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U.S. Department ': . .1 •>! ''.M ..-• Washington, D.C. 20590 

of Transportation 

Research and : ' 3 '\ > Cg 

Innovative Technology 

Administration 

JohnVarley May 17,2011 

Senior Vice President and General Counsel 

Virgin America 

555 Airport Boulevard 

Burlingame,CA 94010 

Review of Staff Action 

Dear Mr, Varley: 

Based on my review of the Docket DOT-OST-2011-0016,1 am modifying the January 21, 2011 

staff action which required Virgin America to submit Latin America entity reports. Thus, in 

accordance with 14 CFR 385.33,1 am granting Virgin America partial relief by establishing an 

effective date of January 1, 2011 for Latin America entity reporting. Virgin America's first 

quarterly financial report for the Latin America entity breakout will be due at the Bureau of 

Transportation Statistics (BTS) on or before August 10, 2011. 

Background 

In December 2010, Virgin America operated 12 round trip flights between San Francisco, 

California and San Jose del Cabo, Mexico. On January 2011, Virgin America increased its 

operations to Mexico so that it is now providing the following service; 

San Francisco - San Jose del Cabo 5 weekly round trips 

Los Angeles - Cancun 5 weekly round trips 

San Francisco - Cancun 3 weekly round trips 

On January 7, 2011, Virgin America requested a waiver from Latin America entity reporting 

based on its belief that its operations to Mexico were limited in scope and that BTS granted a 

similar waiver in 2004 to Jet Blue when JetBlue inaugurated service to the Caribbean. Virgin 

America stated its flights to Mexico account for only 2.7% of its total flights. 

On January 31, 2011, Virgin America submitted a petition for review of staff action and a motion 

to stay the effectiveness of staff action. Virgin America argues that the initial decision is 

contrary to the Department's rules, is substantially deficient, and involves a substantial and 

important question of policy. Specifically, Virgin America claims that BTS ignored the previous 

JetBlue waiver and did not provide a brief reference to the right of aggrieved parties to petition 

the Reviewing Official for review under applicable procedural rules including a statement of time 

within such petitions for review must be filed. 
On February 9, 2011, Alaska Airlines (Alaska) answered in opposition to the Petition for Review 

of staff action. Alaska believes that the real reason for Virgin America's waiver request is not 

the "burden" of Latin America entity reporting, but rather the hope to analyze Alaska Airlines' 

Latin America entity reports while Virgin America's Mexico operational expenses are "shielded" 

in Virgin America's domestic reports. Alaska believes the grant of a waiver would give Virgin 

America preferential treatment giving it an unfair competitive advantage over Alaska's Latin 

American operations. Also, Alaska stated that since 2004 (the time when JetBlue was granted its 

waiver), advances in technology has reduced the reporting burden; and JetBlue's Latin America 

operations were much smaller than Virgin America's Latin American operations. 

On February 15, 2011, Virgin America filed a reply to Alaska Airlines comments stating that 

Alaska mis characterized Virgin's America's waiver request. Virgin America disagrees with 

Alaska's claim that Virgin America wants to shield its Latin American costs and revenues. 

Virgin America stated that "the underlying financial performance metrics for these flights, 

including passenger unit revenue and unit cost, could still be approximated with a high degree of 

accuracy by utilizing Virgin America's system wide financial filings." Virgin America also 

claims that nothing has change in the way air carriers maintain .separate systems of accounts for 

geographic entity reporting. Virgin America argued that its waiver request was consistent with 

the JetBlue waiver. 

First, I will address Virgin America's procedural complaint. The January 21, 2011 initial 

decision denying Virgin America's waiver request advised Virgin America that it could submit a 

petition for reconsideration within 10 days. Virgin America did submit such a petition which 1 

have reviewed and thus. Virgin America's administrative due process rights \vere not violated or 

denied. 

When BTS granted JetBlue its waiver from Latin America entity reporting Jet Blue was 

operating 3 weekly round trip flights. The waiver was later rescinded when JetBlue increased its 

operations to Latin America. 

In order to treat Virgin America in a similar fashion to JetBlue, I am waiving the Latin America 

entity report for the 4^ quarter 2010, when Virgin America operated a total of 12 flights to 

Mexico; however I am establishing a Latin America entity reporting date effective as of 

January 1, 2011. I note that Virgin America has scheduled approximately 150 (lights to Mexico 

in the first quarter 2011. Based on my review, I concur with Alaska Airhnes that it would not be 

a level playing field to allow Virgin America to have access to Alaska's Latin America entity 

reports while Virgin America's cost and revenue data for Mexican service is buried in the details 

of Virgin America's domestic entity reports. I do not believe any cost or revenue differences 

between Virgin's Domestic and Latin America services can be approximated with a high degree 

of accuracy by utilizing Virgin America's system wide financial filings. 
This action is taken by authority granted in 14 CFR Part 385.19(c), 385.33 and appeals may be 

made within 7 days pursuant to the requirements of Part 385.31(a) of 14 CFR Part 385. The 

appeal would be made to the Director of the Bureau of Transportation Statistics, Research and 

Innovative Technology Administration (RITA), who would make the final administrative 

determination in this matter. 

Sincerely, 

Arme Suissa 

Director 

Office of Airline Information 

CC: 

John E. Gillick 

Zuckert, Scoutt & Rasenberger L.L.P. 

888 Seventeenth Street, NW 

Suite 700 

Washington, DC 20006 
CC: 

Monniere 

Stankus 

Gorham 

Leonard 

Fabrizi 

Smith