The US Transportation Department said on Friday that Virgin America Airlines can begin service once it receives necessary safety clearances, concluding a stormy 18 month review of the airline's ties to British entrepreneur Richard Branson.

Agency officials granted final approval of Virgin America's economic fitness application, initially rejected last December, after regulators determined the company would satisfy a law that restricts control of domestic airlines to US citizens.

Virgin America hopes to soon start selling tickets and plans a mid-summer launch with service from its San Francisco base to New York's John F. Kennedy Airport.

Operating a fleet of new Airbus A319s and A320s and promising amenities, Virgin America is taking aim at JetBlue Airways and other carriers that promote customer service.

To win regulatory approval on appeal, Virgin America had to promise to reduce its exposure to overseas interests, including Branson's Virgin Group, which runs British-based Virgin Atlantic Airways.

Virgin America also plans to replace its CEO, Fred Reid, a veteran executive who has held posts at American Airlines, Delta Air Lines and Lufthansa.

Regulators said Reid's "long-standing association with foreign investors" raised concerns about possible overseas influence.

US law restricts foreign ownership in airlines to 25 percent of voting stock.

Virgin America said in a statement that Reid would stay on for six months. No replacement has been named, a spokesman said.

In December, regulators said Virgin America had too much foreign financing.

The Transportation Department also cited the pervasive involvement of Virgin Group and its executives in creating Virgin America, and found that the new carrier would probably be controlled by Branson and his interests.

In response, Virgin America promised that before it began flying it would change loan agreements and remove certain powers of Virgin Group; revise its trademark to ensure independence from Virgin Atlantic and establish a voting trust to administer Virgin Group's equity interest in the airline.

Virgin Group committed USD$88.4 million in debt and equity financing -- slightly less than one-half of the company's start-up financing of USD$177.3 million.

Virgin America also said US-based investment funds Cyrus Capital Partners and Black Canyon Capital would limit investors to US citizens only.

American investors have also pledged another USD$20 million.

Virgin America won tentative approval to operate in March.

The final hurdle is to obtain safety permits from the Federal Aviation Administration, which is expected soon.