Sir Richard Branson's Virgin Group has won final approval to launch a US budget airline.
Branson's new US low-cost airline will target JetBlue's market share
Virgin America plans to take to the skies this summer after the company agreed to revise its links to its British parent firm.
This included the requirement that airline boss Fred Reid is replaced.
The US Department of Transportation said the carrier was now in compliance with US rules restricting foreign control of airlines to 25% of shares.
Overseas control reduced
Mr Reid, who has held senior positions at Delta Airlines and American Airlines, had been appointed chief executive of Virgin America by British billionaire Mr Branson.
This raised concerns among US regulators over possible overseas influence.
He will be allowed to stay at the company for six months after its launch.
"I applaud the DoT for approving our application and fulfilling their long-standing commitment to competition and new choices for travellers," Mr Reid said.
The airline - which is now waiting for safety permits - will operate a fleet of Airbus A319 and A320 aircraft and plans a mid-summer debut flight from its base in San Francisco to JFK airport in New York.
Services to 10 cities, including San Diego, Washington and Las Vegas, are expected within the airline's first year of operation.
To win flight approval, the airline agreed to revise its trademark license to ensure it operates independently from Branson's British operation Virgin Atlantic and also promised to sever other financial links to the Virgin Group.