Virgin secured high-level political backing for the deal from California governor Arnold Schwarzenegger, New York governor George Pataki, and New York mayor Michael Bloomberg, among others.

Remarkable incentives offered at the state and city level supported the final decision but Mr Reid says that other considerations weighed heavily. “Culturally, New York and San Francisco reflect the Virgin brand’s fun, dynamic style, making them both ideal places to recruit creative, skilled employees who can deliver on our vision of outstanding customer service.”

The airline will initially recruit more than 300 people to run its new corporate headquarters in New York, and plans to hire more than 1500 flight attendants, pilots, maintenance technicians, engineers and other staff for its operational headquarters in San Francisco. Overall, it expects to hire more than 3000 people in the next five years.

New York State and New York City offered more than $11m in grants and incentives, including tax and energy incentives, plus funding for job training, co-operative marketing and community development. The state of California and the city of San Francisco offered more than $15m in grants and other incentives; and San Francisco is providing Virgin with free use of a number of unused airport gates.

Virgin is raising private equity to finance its new US airline and hopes to be operational in the second half of 2005. “We are operating temporary offices in both New York and San Francisco,” says company spokesperson Stacy Geagan, who expects the final leases to be signed soon.