Hi, is it possible to have two holding companies in two different countries(Say USA and Singapore)? This way i would have multiple traffic rights. If Not, then how can i gain access to multiple traffic rights?
Also, if i am the largest shareholder of a company(but less than 50%), will i get to take decisions with respect to that company? And will i have traffic rights in the country where that company is present?
It isn’t possible, with some limited exceptions. A top-level holding takes the traffic rights from the country, but top-level holdings owned by the same player cannot interact with each other. A subsidiary of a holding inherits traffic rights from the parent holding regardless of where the subsidiary is founded, and cannot interact with another top-level holding or its subsidiaries if owned by the same player. The only exception is a top-level holding and a subsidiary founded in an open investment country (i.e. USA holding, Ecuador subsidiary), the subsidiary will hold Ecuadorian traffic rights. However, they will not be able to fly domestically within the USA, nor flights from the USA to a third country.
The largest shareholder of a company controls the company. (provided Martin fixed that weird issue with the identical share ownership thing.) They can lease planes and create schedules for their new subsidiary. However, 50% of the shares must be owned by companies registered in that subsidiary’s country in order to have traffic rights to operate there. If an American company purchases 50%+1 shares of a Canadian company, then the Canadian company loses their Canadian traffic rights and assumes American traffic rights. The American company that purchases 40% of the shares of a Canadian company can have control, only if two (or more) Canadian companies own the 50%+1 shares, while retaining Canadian traffic rights.
However, 50% of the shares must be owned by companies registered in that subsidiary's country in order to have traffic rights to operate there. If an American company purchases 50%+1 shares of a Canadian company, then the Canadian company loses their Canadian traffic rights and assumes American traffic rights. The American company that purchases 40% of the shares of a Canadian company can have control, only if two (or more) Canadian companies own the 50%+1 shares, while retaining Canadian traffic rights.
Not exactly correct. When an alliance member wanted an exit from the GW and sold his company in Turkey, I served as a non-executive investor for it because the buyer, a newly formed Turkish company, could not buy the whole stock. They were the largest shareholder at 20.4 percent, while other 4 airlines from 4 different countries (with 4 different traffic rights) held 19.9% each. The company had Turkis traffic rights because no individual country held more shares than the Turkish company, so the largest shareholder's home country gave traffic rights, and allowed him to manage the company. So it is not necessarily true that to have e.g. USA traffic rights, USA companies must hold 50+%. Better way to say this is that no single third country airlines combined can hold more shares than the airline of the country for which it wants to have traffic rights, but airlines from multiple third countries can hold vast majority and the airline can still have X traffic rights. *
That the buyer was an a***e and 3 days later deleted the company resulting in substantial loss for me, is another matter.
* Technically, 99 airlines from 99 different countries could hold stock in USA airline with 0.999% each, and 1 airline from USA can hold 1.099%, and the airline would have USA traffic rights. But the moment one of those 99 airlines sell more than a few shares of stock to another airline based in one of these other 99 countries, the airline in question would lose USA traffic rights, and would get traffic rights of the country of biggest shareholder, who might be just somebody owning 1.1% of shares.
You only buy larger airlines were you do not have traffic rights if you want to terminate all leases and fire all staff and only use the airline has a leasing or terminal company.
Of course, it is possible!
For example, you have airline in Hongkong, but you want lead airline in USA. Lets found subsidiary in USA and wait for 2 week and start IPO.
Then you sell at least 51% shares to other airline in USA for example your alliance member. ATTENTION: Your partner have to keep your shares in two different airline in USA
Example
Your airline 34% shares
Your partner in USA 33% shares
Your the same partner but other airline in USA 33%
Then you have traffic right in USA because of 66% shares in USA at the same player
Of course, it is possible!
For example, you have airline in Hongkong, but you want lead airline in USA. Lets found subsidiary in USA and wait for 2 week and start IPO.
Then you sell at least 51% shares to other airline in USA for example your alliance member. ATTENTION: Your partner have to keep your shares in two different airline in USA
Example
Your airline 34% shares
Your partner in USA 33% shares
Your the same partner but other airline in USA 33%
Then you have traffic right in USA because of 66% shares in USA at the same player
Or
your airline 30.1% shares
Your partner in USA #1 - 20%
Your partner in USA #2 - 20%
Other investors 29.9%
This is easy it is just bribing your partner's lol.
Can I ask a follow-up question on this one?
I understand one needs to have the largest stake, but making sure two or more others have the majority, in order to keep traffic rights in a certain country.
Just making sure: let's take the case of an "investment-open" country: does it matter there whether you have the largest stake, or the majority? Would you keep the traffic rights regardless of the way the shares are divided? (it would seem logical as you can also simply start a company from scratch in such a country).
I have a question on a different note - If your flight’s origin and destination are in the same country, can you have an intermediate stopover in a second country? Examples include:
CDG (Paris Charles de Gaulle, France) --> SIN (Singapore Changi, Singapore) --> NOU (Noumea Tontouta, France).
ANC (Anchorage, USA) --> YVZ (Calgary, Canada) --> ORD (Chicago O’Hare, USA).
LHR (London Heathrow, UK) --> LOS (Lagos Murtala Muhammed, Nigeria) --> MPN (Mount Pleasant, UK).
JNB (Johannesburg, South Africa) --> MSU (Maseru, Lesotho) --> CPT (Cape Town, South Africa)
'investment-open' country makes everyone can set up their division there, so it doesn't matter who control the company at all
I have a question on a different note - If your flight's origin and destination are in the same country, can you have an intermediate stopover in a second country? Examples include:
CDG (Paris Charles de Gaulle, France) --> SIN (Singapore Changi, Singapore) --> NOU (Noumea Tontouta, France).
ANC (Anchorage, USA) --> YVZ (Calgary, Canada) --> ORD (Chicago O’Hare, USA).
LHR (London Heathrow, UK) --> LOS (Lagos Murtala Muhammed, Nigeria) --> MPN (Mount Pleasant, UK).
JNB (Johannesburg, South Africa) --> MSU (Maseru, Lesotho) --> CPT (Cape Town, South Africa)
Yes, all theese would work perfectly, but I am not sure that demand is there for some of them. Presuming that you're holding is based in these nations.
I have a question on a different note - If your flight's origin and destination are in the same country, can you have an intermediate stopover in a second country? Examples include:
CDG (Paris Charles de Gaulle, France) --> SIN (Singapore Changi, Singapore) --> NOU (Noumea Tontouta, France).
ANC (Anchorage, USA) --> YVZ (Calgary, Canada) --> ORD (Chicago O’Hare, USA).
LHR (London Heathrow, UK) --> LOS (Lagos Murtala Muhammed, Nigeria) --> MPN (Mount Pleasant, UK).
JNB (Johannesburg, South Africa) --> MSU (Maseru, Lesotho) --> CPT (Cape Town, South Africa)
In that situation you would be able to sell tickets on all three 'legs', i.e. in your first example you could get passengers CDG-SIN,SIN-NOU and CDG-NOU.
Whether there is enough demand to justify such a route is a different story.
(You can always have intermediate stops: e.g. LHR-SIN-SYD, except that as a UK-based airline you would only get pax on LHR-SIN and LHR-SYD, not SIN-SYD.)