VIRGIN AMERICA FINALLY ARRIVES

Richard Branson, chairman of the Virgin Group, played his rock star role to perfection Wednesday as the first flight of the nation's newest airline landed at San Francisco International Airport.

The British billionaire walked off Virgin America Flight 1 from New York - which arrived at 1:25 p.m., 15 minutes behind schedule because of bad weather back East - onto a long, scarlet carpet. He grinned broadly, gave a two-handed wave to hundreds of onlookers and bear-hugged San Francisco Mayor Gavin Newsom, who had shed his jacket and tie and rolled up his sleeves to welcome the airline to SFO, its home airport.

It didn't have the air of a typical business event. But then Branson - casually dressed and affable - is not your typical executive.

After three exhausting years of revving up, Virgin America - 25 percent owned by Branson - won the approval of US. regulators to begin flying as a low-cost carrier. The airline is starting small, with two flights a day to New York and five to Los Angeles from SFO. In the coming weeks, it will add service to Las Vegas and Washington.

Foreign citizens are barred from owning more than 25 percent of a U.S. airline or exercising operational control. Branson criticized those restrictions in an interview after the squad of teenage cheerleaders and the senior tap-dancing troupe brought in to celebrate the first flights had left SFO's glossy International Terminal.

"Protectionism is very dangerous, and it's very anti-consumer," Branson said.

"There are aspects of America that have become even more protectionist. We (the United Kingdom and the United States) can fight a war together, but British people are not able to come to America and set up a business. I find it archaic and bizarre. Any company should be able to go anywhere in the world, whatever business you're in."

Virgin America is an independent U.S. company, not a subsidiary of Virgin Group, stressed Fred Reid, the American CEO of Virgin America, based in Burlingame. Reid agreed to leave the airline - which licenses the Virgin name from Branson - as part of the deal to win approval from the Department of Transportation to begin flying. Regulators demanded his departure, insisting he was too close to Branson.

Before leaving, Reid will try to win approval to link the frequent-flier programs of Virgin America and London's Virgin Atlantic Airways, Branson's international carrier, Branson said.

In the financial and operational sense, "We have to be at arm's length," Branson said. "At the same time, getting a frequent-flier program between Virgin America and Virgin Atlantic makes sense."

Branson said the launch of Virgin America will promote the Virgin brand, which already adorns airlines in far-flung places such as Nigeria, Australia and Branson's native Britain. That in turn could make it more likely that Virgin Atlantic, which operates a daily flight between SFO and London Heathrow airport, will build enough business to begin a second daily flight on the route, he said.

"The advent of Virgin America will help take the Virgin brand in America from a reasonably well-known brand to a really well-known brand," Branson said.

Virgin America has hired about 500 employees and hopes to build a staff of as many as 5,000 in five years, many based in the Bay Area, Reid said.

"We have 33 firm orders for aircraft," Reid said, saying that advance orders for tickets are strong and prospects for long-term growth good. "We have options for 75 more planes."

"Five years ago, low-cost carriers like Southwest and JetBlue had 10 percent of the U.S. aviation market," Reid said. "Today, they have 35 percent. Americans have a clear preference for next-generation airlines."

SFO Airport Director John Martin noted that "2007 has been our year" when it comes to low-fare airlines. Just three months ago, SFO didn't have a big-name low-cost carrier. In May, JetBlue began flying from SFO, Virgin America has finally taken off and on Aug. 26, discount king Southwest Airlines will return to SFO with 18 daily flights.

"One has to believe they came because of Virgin America," Martin said. "It's great for consumers. Everyone is lowering fares, including major airlines that have been here for years."


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