Department of transportation washington, D. C

5. Ownership structure. As stated in the Introduction to this Application, Virgin Nigeria is owned entirely by private sector businesses. 51% of the company’s shares is held by Nigerian citizens, pursuant to a private placement organized by Investment Banking & Trust Company, Nigeria’s premier investment bank. Virgin Nigeria is planning to sell its shares in an initial public offering (IPO) on the Nigerian Stock Exchange in the next few years. The remaining 49% of the shares is held by Virgin Nigeria’s strategic partner, Virgin Atlantic Limited. Virgin Atlantic Limited is itself owned 51% by Virgin Group Investments Limited and ultimately by Sir Richard Branson, a UK citizen, while 49% is owned by Singapore Airlines, a Singaporean citizen. This results in an effective UK and Singaporean interest respectively of 24.9% and 24.1% in Virgin Nigeria. Following is a chart which shows the overall ownership structure of the company. A description of the entities which hold 5% or more of the shares of the Virgin Nigeria Airways is contained in Exhibit VNA-001. A description of the entities which hold 5% or more of Virgin Atlantic Airways Ltd. can be found at Exhibit VNA-002.

To the extent that a question exists regarding ownership and control of Virgin Nigeria, it would not be inimical to U.S. aviation policy or interests to waive the ownership and control standards in this case and grant the requested authority. The Department has waived those standards in other cases where there was less than the 51% homeland ownership that exists here.³ It has even issued a waiver where the non-homeland owner was a British corporation despite the lack of an open skies agreement with the United Kingdom.⁴ The considerations favoring such a waiver are particularly compelling here given the open skies agreement between the U.S. and Nigeria and the fact that the Nigerian government selected Virgin Atlantic as Virgin Nigeria’s technical partner after an extensive search and tender process. Moreover, it would help further U.S. interests in promoting economic development in Africa and ensuring a safe and secure air transportation system.

6. Board of Directors. Virgin Nigeria has an 11-member Board of Directors. The Chairman of the Board is Mr. Felix Ohiwerei, who is a Nigerian citizen. Following is a list of the names and nationalities of these directors. As will be evident from the background information about these individuals set forth in Exhibit VNA-003, Virgin Nigeria has a strong Board which is comprised of many of Nigeria’s most prominent and successful businessmen:

7. Management Team. Virgin Nigeria has established a highly qualified management team. Following is a list of the names, titles and citizenship of each of these individuals. None of these individuals are related by blood or marriage. Further details about these individuals can be found in Exhibit VNA-004.

8. Ownership of Other Airlines. None of Virgin Nigeria’s officers, directors, managers, or holders of more than five percent of its stock holds any interest in any U.S. carrier. Steve Ridgway and Julie Southern act as Chief Executive Officer and Chief Financial Officer of Virgin Atlantic Airways respectively. Virgin Group Investments Limited holds an interest in Virgin Atlantic Limited, Virgin Blue, Virgin Express and Virgin America. No other officers, directors, or managers of Virgin Nigeria, or holders of more than five percent of its stock hold any interest in any other foreign air carrier, in any other person engaged in the business of aeronautics, or in any common carrier, or any person whose principal business is the holding of stock in, or control of, any air carrier.

9. Insurance. The Foreign Air Carrier Certificate of Insurance will be provided to the Department. As part of its temporary ACMI lease, Virgin Nigeria is currently insured under the agreements with BH Air and Virgin Atlantic Airways, respectively.

10. Air Operators Certificate. Virgin Nigeria’s operating authority, its Air Operator’s Certificate (AOC) was issued by the Nigerian Civil Aviation Authority on June 3, 2005 and the Federal Ministry of Aviation issued on April 19, 2005 its Air Transport License (ATL) (see Exhibit VNA-005). The AOC is renewable every two years and the ATL is renewable every five years.

11. Operating history. Virgin Nigeria Airways Limited was registered on January 7, 2004 by the Federal Government of Nigeria with the name “Nigeria Eagle Airlines plc” as a brand new shell company to facilitate the eventual legal registration process for the flag carrier. The company’s Certificate of Incorporation number is 501975.

Virgin Nigeria operates as the Nigerian flag carrier from its hub at Lagos (Murtala Mohammed International Airport). Its first flight commenced on June 28, 2005 to London and it now operates from Lagos to London, Johannesburg, Accra, Douala, Abuja and Port Harcourt. Virgin Nigeria is developing a global network of intercontinental, regional and domestic routes from its home base in Lagos. In addition to the above named routes, new routes are planned for launch regularly.

Virgin Nigeria has operated scheduled international and domestic services to the routes listed below, with respective start dates as follows:

• 
  28 June 2005: LOS – LON (Three times per week)
  
• 
  29 June 2005: LOS – ABV (Three times a day)
  
• 
  30 June 2005: LOS – PHC (Two times a day)
  
• 
  20 July 2005: LOS – ACC (Once a day)
  
• 
  25 Oct 2005: LOS – DLA (Once a day)
  
• 
  24 Nov 2005: LOS – JNB (Three times per week)
  

Virgin Nigeria is developing a global network of intercontinental, regional and domestic routes from its home base in Lagos. In addition to operating from Lagos to London, Accra, Abuja, Port Harcourt, Douala, and Johannesburg, new routes are planned to be opened shortly.

The route network in the future will encompass intercontinental routes to Asia, the Middle East, Europe and North America, as well as regional routes within West and Central Africa and key domestic routes within Nigeria.

In line with the national objective of turning Nigeria into a leading aviation hub in Africa, Virgin Nigeria has been allocated its operational space at Lagos Murtala Mohammed International Airport for all its operations, whether international or domestic. From the outset this will allow the beginnings of a hub at Lagos, with the ability of passengers transferring within the terminal. The same is occurring at Abuja, with both domestic and international direct flights planned.

Virgin Nigeria is investing substantial sums in improving the end-to-end customer experience in Nigeria, particularly at the airports and has also introduced a new payment method in partnership with the UBA Group, to ease payment difficulties for its customers. Virgin Nigeria’s investment at the airport is enhancing the customer facilities at its Nigerian airports, quite separately from the responsibilities of the Federal Airport Authority of Nigeria (“FAAN”).

Virgin Nigeria is now flying Boeing 737-300 aircraft leased from GECAS on its own Air Operator’s Certificate within Nigeria and the West and Central African regions, with aircraft 5N-VNA being the first of these.

12. Further information re regulatory oversight of Virgin Nigeria. The President of Nigeria has been personally driving aviation as a national priority and has stated his administration’s determination to use the rapid development of the aviation sector as an engine of economic growth to help diversify the Nigerian economy away from its undue dependence on oil as a source of export and government revenue. Having successfully created the nation’s flag carrier, the government is committed to building and maintaining an aviation infrastructure that meets global standards of safety, security and industry best practice. It is the Government’s intention that Nigeria becomes a safe skies country in the very near future and Virgin Nigeria would welcome the assistance of the FAA in this effort.
Primary oversight and audit activity rests with the Nigerian Civil Aviation Authority. This mandatory requirement is prescribed in the Nigerian Civil Aviation (Air Navigation) Regulations Part 6 Para 6.5.10. The NCA(AN) R's were derived from three primary regulatory sources:

• 
  ICAO
  
• 
  FAR’s
  
• 
  UK ANO
  

It is proposed that the flight operations to the United States at issue in this Application will be provided pursuant to a wet lease arrangement with Virgin Atlantic Airways. As such, those operations will be overseen by the UK Civil Aviation Authority, and performed in accordance with JAA standards. Maintenance on these aircraft will be performed in the United Kingdom by Virgin Atlantic, or its authorized contractors, under UK CAA standards. The UK is a signatory to the ICAO convention.

Virgin Nigeria Airways conducts operations utilizing two Airbus A320 aircraft, leased from Balkan Holidays Air (BH Air), under the terms of an ACMI contract, and an Airbus A340 aircraft, leased from Virgin Atlantic Airways. Virgin Nigeria has also now started operating Boeing 737-300 aircraft dry leased from GECAS on its own Air Operator’s Certificate. BH Air conducts operations pursuant to an Air Operators Certificate, issued by the Bulgarian Civil Aviation Authority (“BCAA”). An agreement was reached between NCAA and BCAA, such that oversight responsibility of BH Air operations in Nigeria would remain with BCAA. BH Air will continue to be audited by BCAA in addition to the NCAA audits, and reference to its operations within West Africa, including Maintenance activity, is made in its Operations and Maintenance Organization Manuals. BCAA inspected the VNA Maintenance facility prior to granting approval for its use by BH Air.

In addition to conforming to our primary regulatory body, the NCAA, Virgin Nigeria’s absolute focus on safety and standards has led Virgin Nigeria to elect to operate to additional scrutiny and standards including audits by Virgin Atlantic and also the JAAR Ops standards governed by the Joint Airworthiness Authority European regulatory body. This is an international aviation standard found commonly in Europe. Compared to certain other standards, it imposes a greater burden on operational management and on costs, but is in keeping with Virgin Nigeria’s philosophy of bringing the best relevant international standards to its business in Nigeria.

13. Other audit activities. Virgin Nigeria Airways has applied for IATA membership. Since January 1, 2005 IATA has stipulated that each new applicant must undergo a series of audits prior to being given membership:

• 
  Operational Evaluation Visit (OEV), which was carried out May 2005
  
• 
  IATA Membership Entry Audit (IMEA), which was carried out December 2005
  
• 
  IATA Operational Safety Audit (IOSA) TBA
  

Virgin Nigeria Airways has long-term sales with many corporate bodies throughout Nigeria, including with major US multinational corporations which have a presence in Nigeria, including with oil companies such as Exxon Mobil, Shell, Chevron Texaco, Schlumberger, Halliburton etc, and those companies involved in the petrochemical industry.

As part of the duty of care which these companies have to their staff, it is usual before signing contracts with airlines that these companies carry out an audit of any potential carrier. Such audits are usually carried out on behalf of the company by third party aviation consultants or agencies. Virgin Nigeria has had several of these corporate audits to date and passed all of them.

The Airworthiness Department of Virgin Atlantic conducts regular audits of Virgin Nigeria’s operations. The scope of the audits is determined by Virgin Atlantic and the standards applied are those of JAR-Ops 1.and JAR 145. For the purpose of audit planning it has been agreed with the Quality Assurance Manager Airworthiness and Flight Operations that the Virgin Atlantic Quality Audit Plan, as detailed in the Virgin Atlantic Quality Manual, Part 4 (3) has been amended to include Virgin Nigeria.

Virgin Atlantic’s audit of Virgin Nigeria is scoped, prepared and conducted in accordance with the Virgin Atlantic Quality Manual Part 4 (2) using such checklists drawn from the Virgin Atlantic Quality Manual Part 4 (3.1) as is deemed necessary to fulfill the scope of the audit.

Virgin Nigeria has just completed such an audit by Virgin Nigeria and successfully passed this. In addition to this, Virgin Nigeria has just completed an operational audit by IATA as part of its membership requirements and has successfully passed this.

14. Current aircraft leases. In line with best practice in starting a new, high quality airline, Virgin Nigeria has temporary Aircraft Crew, Maintenance, Insurance (ACMI) leases in place. This was to enable it start with the safest possible operations, while the airline builds up its people and operational capabilities, to be fully trained and operating to the highest standards. Virgin Nigeria is now operating a Boeing 737-300 aircraft dry leased from GECAS on its own Air Operator’s Certificate. It is proposed that Virgin Atlantic Airways provides an aircraft and crew for Virgin Nigeria’s planned US operation. A Bulgarian carrier, BH Air, provides an aircraft and crew for certain of Virgin Nigeria’s intra-Africa services. A list of aircraft leased by Virgin Nigeria can be found at Exhibit VNA-006.

Under the ACMI lease agreements with BH Air and Virgin Atlantic Airways respectively, the Bulgarian Civil Aviation Authority and the United Kingdom Civil Aviation Authority with address at 9 Diakon Ignatii Street, Sofia 1000 Bulgaria and Great Minster House, 76 Marsham Street, London U.K. SW1P 4DR, respectively, have regulatory jurisdiction over some of Virgin Nigeria’s flight operations.

Virgin Nigeria is in the process of converting the ACMI leases to dry leases subject to recruiting and training constraints.

Virgin Nigeria anticipates having 4 A340s and 7 B737 aircraft by the second year of operations, and has recently taken delivery of the first of these Boeing 737-300 aircraft.

If the present permit application is granted as proposed, Virgin Nigeria plans to start the service with an ACMI leased Airbus 340-311 from Virgin Atlantic Airways to operate the route to the United States. As part of Virgin Nigeria’s future fleet planning, we are also in talks with Boeing regarding its Boeing 767, 777 or 787 series with a view to utilizing this aircraft in the future on the route to the United States.

Further details concerning Virgin Nigeria’s lease arrangements can be found at Exhibit VNA-007.

15.