If I setup a holding in the US, and that holding sets up a subsidiary in Qatar, then does the subsidiary have traffic rights both in US and Qatar ?
No, the subsidiary will only have the regular traffic rights for Qatar.
Why is that ? If I setup the subsidiary in say UK, it would have US rights. Why does it loose the US rights if I set it up in Qatar instead of the UK ?
You can make another subsidairy in US. Compare it to real life why would an airline from Qatar fly in the US?
It wouldn't work in the UK as well, not in any country. The game can't include all traffic right agreements that may exist in real life, both for technical and game-play reasons.
Oh I am quite sure the US-UK example would work just as I said. The subsidiary would have US rights only (no UK rights).
The Qatari scenario would be quite handy. One company that would be able to cover US Domestic market, US-Asia market, US-Europe market, Europe-Middle East market, Europe-Australia market, Europe-Far East Asia market. All this with Qatari salaries...
In restricted countries, your subsidiary maintains mother company’s traffic rights. Such subsidiary is considered an “extension” of mother company’s enterprise.
in investment open countries, your subsidiary gets local traffic rights but loses mother company’s traffic rights. Such subsidiary is considered a “new” enterprise rather than an extension of mother company.
Oh I am quite sure the US-UK example would work just as I said. The subsidiary would have US rights only (no UK rights).
The Qatari scenario would be quite handy. One company that would be able to cover US Domestic market, US-Asia market, US-Europe market, Europe-Middle East market, Europe-Australia market, Europe-Far East Asia market. All this with Qatari salaries…
You can do that with mother company in USA and subsidiary in Qatar. You interline between the two ans you can use 737, CRJ Q400 in USA and Airbus, EJET, ATR in Qatar, for example, expanding faster while maintaining 3 maintenance categories in each one.
You can interline with common partners in Asia and Europe, for a company with 500 planes both in USA and Qatar those contracts would not even sum up 2 millions redundancy, a very small price to pay to have a flexibility two companies offer instead of one…
Yes the two separate companies would off course achieve most of the same thing
Except,
I am thinking about a future new game world. If the two rights scenario was possible, I would be able to setup a single company that would be able to "subsidize" each other quite easily. In the early stages of the game I have the single 10 mil that I could use most effeciently when needed. In the subsidiary+mother company scenario I would have 5 mil for each in the beginning, which means that both of them grow slowly in the beginning. The single company approach would allow me to move planes to routes where they are most needed very efficiently. Ie first have a CRJ running almost non stop DOH-DXB and when I upcauge it to say A321 a few weeks later I could use the CRJ on something like Albany - JFK on the other side of the pond.
Also having two separate companies interline with same airlines in Europe and Asia would mean double the cost in Interlining staff.
Also having two separate companies interline with same airlines in Europe and Asia would mean double the cost in Interlining staff.
That's what I said, about interline cost redundancies. I have a company with 515 planes ... it has interlining cost of 2.6 million, with 8 "mega-companies" each costing interline staff of 150,000 or more. This is just a grain of sand on the beach, really a zero consideration at my average 44% profit margin.
My maintenance cost for a new category (+15%) would be about 30% more than the interline expenses.
It would be the same case operating Doha/USA company.
Now about airliner transfers between the markets, that is the only advantage I see, but as soon as you grow beyond 15 planes, this is also zero consideration as you usually have nice money in the bank account to get another plane produced at the different subsidiary, and as I said, you can use different manufacturers while still maintaining 3 categories in each enterprise. And nobody starts with CRJ on a new server, because you can virtually fill a 748 on Albany to Rochester, with the tightest seat permitted for each class of service, during the first month after the server start. And with the right strategy, pricing, etc. after the first month you can have so much money in your bank account that a difference between "transferring" plane from DOH to ROC, and just getting a new plane for ROC, would be a no-brainer.
Sure you could fill a 747 initially, but you could not afford one with 5 mil …
So what would be the right way to go ? Divide the 5 mil on day one, or start the US holding first and as quickly as possible launch the sub in DOH with say 20-30 mil initial cash ?
I would go for the second option.
HI Guys,
I have a holding based in Ireland and also a subsidiary that is based in Ireland,
I have opened a new subsidiary of my holding in South Africa, but I cannot run any domestic flights, only flight I can do is a one to Dublin. Is there any way I can run domestic flights in South Africa?
thanks
No, you would need to set up a second holding in South America, but your first holding and second holding would not be able to interline.
Another option would be to find two existing south African companies, each one buying 26% of shares of your S.A. subsidiary thus giving you traffic rights, with you being the manager owning the largest 48% stake.
Please note that these investors would need to be real operating and functioning airlines in that market, otherwise it would be considered an illegal investment construct.
No, you would need to set up a second holding in South America, but your first holding and second holding would not be able to interline.
Another option would be to find two existing south African companies, each one buying 26% of shares of your S.A. subsidiary thus giving you traffic rights, with you being the manager owning the largest 48% stake.
Please note that these investors would need to be real operating and functioning airlines in that market, otherwise it would be considered an illegal investment construct.
whoaa, what an investment construct.. gonna be difficult though, why would one let a competitor enter his market..
whoaa, what an investment construct.. gonna be difficult though, why would one let a competitor enter his market..
Cooperation, or the market may be huge (Europe, USA, China), etc.
It's usually alliance partners that grant this right, to help with a "slot rush" at certain airport, etc.
It may go along the following lines: My major competitor in Germany just folder. So I will give your company European rights, and you help me take up slots in FRA. Later on you release the slots to me, or I buy your company, etc. As a reward you can keep the European inside-EU rights and build up a non-competing hub on the other side of EU... something along those lines.
But your investor(s) need to be real operating airlines, not just a fellow player who sets up a second holding in EU/Germany to buy your stock and give you the traffic rights.
The advantage of doing a joint-venture with a local partner is that you can invest hundreds of millions AS$ into the venture, whereby if you start a new holding on your own you start up with 10 million AS$.
Or maybe the local partners do not want to engage in Long Haul (huge risk and investment) so you create a long haul carrier which interlines with them and which they own stock of.
There are multiple possibilities of what can be achieved.
But of course, there is a risk. Because your investors must hold 51% together in order to give you traffic rights, if they decide to take over the company, they can just do it - and you are out. Or if one of them goes bankrupt or sells a portion of shares to a third country investor, you may lose the traffic rights, etc. So this construct is only if you know well and trust your partners/investors and will always involve risk of loss.