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Last Updated: Wednesday, 21 March 2007, 10:28 GMT
Virgin America set for go-ahead
Virgin Atlantic plane
Virgin America had planned to launch flights in 2007
The US Department of Transportation (DoT) has cleared the Virgin Group to launch a budget airline in America.

Virgin America said it would alter its ownership and management to meet a US requirement that airlines are 75% owned and controlled by US citizens.

The move comes ahead of a European Union decision on whether to back a transatlantic "open skies" proposal.

It is being seen as an effort by the DoT to allay concerns that the pact is unfairly weighted towards US airlines.

The DoT's decision comes after earlier refusing to grant it an operating licence because the carrier was "not under the actual control of US citizens".

Minority stake

The Virgin Group has a minority stake in California-based Virgin America.

As part of the criteria for getting its licence, the new carrier must replace its chief executive, Fred Reid, with someone who has fewer ties to Virgin's head, Sir Richard Branson.

This would "substantially" alleviate worries about the airline's independence, the DoT said.

Virgin America's application is completely separate to the open skies deal, which would open up the transatlantic route to more airlines, as well as promoting co-operation in security and safety issues.

The vast majority of the 27 EU ministers sitting around the table on Thursday will be in favour of the deal.

However, Britain is under pressure from BA to vote against it and has been floating the idea of postponing the implementation by at least a year.

The deal is being introduced after a series of bilateral deals between EU Member States and the US were deemed illegal by the European Court of Justice.

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