(The Boston Herald posted the following article by Greg Gatlin on its website on February 25.)
BOSTON — A powerful transportation trade union group has warned Massachusetts political leaders in Washington that Virgin USA’s planned low-cost domestic airline could hurt U.S. airlines and workers.
A letter to members of Massachusetts’ congressional delegation from the leader of the Transportation Trades Department, AFL-CIO, comes as Virgin prepares to pick a home for its U.S. airline headquarters, which could bring with it hundreds of jobs. Boston is competing against San Francisco and Northern Virginia for the headquarters.
The Feb. 23 letter from Edward Wytkind, president of the union group, accuses Sir Richard Branson, Virgin Group’s British chairman, of having “a clear agenda: to gut U.S. laws that limit foreign control and ownership of U.S. airlines.” The letter was also sent to leaders of the California and Virginia congressional delegations.
Wytkind said the introduction of a foreign-controlled, low-cost carrier could undermineU.S. carriers – most of whom have union contracts. “The competitive pressure this will place on existing carriers is real,” he wrote.
A top Virgin USA executive said its airline ownership structure would follow the letter of the law.
Wytkind’s tough words come as President Bush seeks to ease airline ownership caps on foreigners.
Foreign interests can own no more than 25 percent of the voting stock of a U.S. carrier, and can’t service domestic point-to-point markets. A foreigner can own up to 49 percent of an airline’s non-voting equity.
Bush has asked Congress to raise the foreign-owned voting stock cap to 49 percent, saying it would give U.S. airlines more access to foreign capital. Wytkind’s group, with 35 affiliated unions, opposes that change.
Branson has called for the scrapping of foreign ownership restrictions, saying they’re outmoded in today’s aviation marketplace.
“We don’t want to see more and more virtual airline companies set up in this country, preying on a marketplace served by network carriers that employ most of the nation’s airline workers,” Wytkind told the Herald.
Todd Pawlowski, with Virgin USA, didn’t comment on the letter, which he hadn’t seen. But, he said, Branson will engage business partners to keep 51 percent of the airline’s equity in U.S. hands.
Susan Elsbree, spokeswoman for the Boston Redevelopment Authority, said airline foreign ownership issues should be decided in Washington. She said it would be “short-sighted” for Boston not to try to gain Virgin’s business and the valuable jobs it could bring.
A spokesman for U.S. Sen. Edward M. Kennedy (D-Mass.) said Kennedy is “very concerned about issues raised by the union.” Kennedy has told Virgin executives he would advocate on their behalf in Washington.
A spokesman for U.S. Sen. John F. Kerry (D-Mass.) said Kerry supports Bay State economic development, but the letter raises “legitimate concerns about Virgin USA.”