Hong Kong

[jest]

In the game, Hong Kong is treated like an independent country. Why ? Hong Kong was a brittish colony from 1841 to July 1997 and after that it became a " Special administrative region of the People's Republic of China ". So, is there a special reason for airlines based there cannot hub anywhere else? My guess is that this is another artificial measure to stop the dreadful mega airlines with hundreds of horrible planes that oppress the little defenseless airlines.

[ICEcoldair881]

look at CX and CZ. do you see them having bases in HKG and CAN or do they just have the one in their base country? exactly. CX is based in HKG, so they can only base in: HKG. CZ is based in China, and they only have bases in: China. simple as that. it's so Air China/China Southern/China Eastern etc don't expand into Cathay Pacific's market and possibly take their routes over. Also, what you are saying about it being an SAR of China is completely right, to a degree. An SAR is when it is governed by the P.R. of China as a whole, but the region has it's OWN government that controls all but international/federal stuff, which is handled by the P.R. of China. It's the same with Macau SAR and Taiwan. Taiwan is also owned by the P.R. of China, but Taiwan is it's own country with it's own government. They sometimes us the name "Republic of China" to make themselves stand out against the P.R. of China, who owns them. that's why.

Cheers,
ICEcold

[Sami]

So, is there a special reason for airlines based there cannot hub anywhere else?

Because that's how it's working in the real world.

The "special administrative region", or similar, for any country may not guarantee aviation freedoms or open aviation markets.

[jest]

Because that's how it's working in the real world.

The "special administrative region", or similar, for any country may not guarantee aviation freedoms or open aviation markets.

I might agree to that but then again is BA allowed to hub in Germany? or Lufthansa allowed to hub in France ? I dont think so, yet in the game they can.

[Sami]

Yes they are allowed, after EU open skies came valid. (that starting year of the deal however isn't modeled yet here)

[ICEcoldair881]

it's because the European Union is a common economic area. Anything and everything is shared in the EU, even currency and airline hubs. It says in the manual that airlines can only base within the country or in a common economic area (EU). That's why airlines in the UK can base in, say, Bulgaria if they wanted to, because both are part of the EU. the SAR thing is different because it is a seperate country, just owned by the P.R of China.

ICEcold

[blumage]

I might agree to that but then again is BA allowed to hub in Germany? or Lufthansa allowed to hub in France ? I dont think so, yet in the game they can.

Lufthansa has a hub in Italy. Go check Lufthansa Italia and you'll know!

[blumage]

look at CX and CZ. do you see them having bases in HKG and CAN or do they just have the one in their base country? exactly. CX is based in HKG, so they can only base in: HKG. CZ is based in China, and they only have bases in: China. simple as that. it's so Air China/China Southern/China Eastern etc don't expand into Cathay Pacific's market and possibly take their routes over. Also, what you are saying about it being an SAR of China is completely right, to a degree. An SAR is when it is governed by the P.R. of China as a whole, but the region has it's OWN government that controls all but international/federal stuff, which is handled by the P.R. of China. It's the same with Macau SAR and Taiwan. Taiwan is also owned by the P.R. of China, but Taiwan is it's own country with it's own government. They sometimes us the name "Republic of China" to make themselves stand out against the P.R. of China, who owns them. that's why.

Cheers,
ICEcold

ICEcold you're touching delicate political stuff here.

[samomuransky]

Just small note - there is difference between EU and EEA (European Economic Area). As far as I know, openskies agreement applies for European Union, not for economic area.

[samomuransky]

Lufthansa has a hub in Italy. Go check Lufthansa Italia and you'll know!

Lufthansa Italia is Lufthansa-owned airline in Italy. Lufthansa itself doesn't have own hub in Italy.

Anyway, EU airlines can have hubs in other EU countries (e.g. Ryanair).

[blumage]

Lufthansa Italia is Lufthansa-owned airline in Italy. Lufthansa itself doesn't have own hub in Italy.

Anyway, EU airlines can have hubs in other EU countries (e.g. Ryanair).

Well actually their IATA and ICAO code are the same. Thus making it the same airline. They only thing is that makes it an italian airline is because they needed an Italian operating certificate, to be able to bring to court the government because it's impossed a monopoly on the Milan Linate-Rome FCO route. One of the most profitable route in the world.

[DenisG]

Lufthansa Italia is Lufthansa-owned airline in Italy. Lufthansa itself doesn't have own hub in Italy.

Anyway, EU airlines can have hubs in other EU countries (e.g. Ryanair).

You always need a legal entity wo work in a different country. But as it is probably owned to 100% by Lufthansa, it is part of the concern and the entire income and balance sheet gets consolidated in Germany.
Denis

[ICEcoldair881]

ICEcold you're touching delicate political stuff here.

I am, so I will preempt what I said earlier to smooth over any anger anyone may have from what I said; I looked up the thing with Taiwan/China and it turns out that Taiwan (Republic of China) is actually the original owner of the area that is now the PR of China, and in fact PR of China did not take Taiwan over financially, so my mistake and I apologize if I upset anyone.

[samomuransky]

You always need a legal entity wo work in a different country. But as it is probably owned to 100% by Lufthansa, it is part of the concern and the entire income and balance sheet gets consolidated in Germany.
Denis

Do you? What about Ryanair?

[ICEcoldair881]

Do you? What about Ryanair?

they do the same. everywhere they base they must apply for an OC first, the fly from there.

[Sami]

You always need a legal entity wo work in a different country.

I believe with the EU that's not needed either anymore (as long as the company is from another union country), but in reality does probably make the life a lot easier due to taxation, salaries and such. Though I am no business expert.

[jest]

Lufthansa has a hub in Italy. Go check Lufthansa Italia and you'll know!

In fact there is a Lufthansa Italy, but if you fly from Italy to anywhere, you will have to go through Frankfurt. I only tried Milan to Florence and Milan to JFK, but i am pretty sure that they do not have direct flights from Italy to anywhere. In fact there is an Openskies agreement in place since 2002, but apart for some small exceptions, it is mostly to regulate military traffic. I found a draft of the phase 2 of the agreement on the EU official site, but that was published in March 2010 and it is only a draft. I did not have the time to read it before posting but i will.

And Sami, it is curious that you mention that the reason for not allowing hubs from airlines based in Hong Kong, is that it happens irl when i've always been posting my opinion that the game should be as realistic as possible and all sorts of artificial measures have been put into place to balance the game, just like the gaps between new aircraft deliveries. Like Boeing or Airbus would actually say to a customer willing to pay 40% of an order in the moment that " We are sorry but we must keep some slots just in case someone else wants to buy them".

[slannoy]

I believe with the EU that's not needed either anymore (as long as the company is from another union country), but in reality does probably make the life a lot easier due to taxation, salaries and such. Though I am no business expert.

I confirm that you don't need to create a separate entity to operate in a foreign country. That's not only true for aviation but also for any form of business.

If a company operates in a different country (has employee, offices and so on...) it is called a stable establishment or a branch. A branch and is a part of the legal entity and is taxable in a country were it is located.

[ICEcoldair881]

In fact there is a Lufthansa Italy, but if you fly from Italy to anywhere, you will have to go through Frankfurt. I only tried Milan to Florence and Milan to JFK, but i am pretty sure that they do not have direct flights from Italy to anywhere. In fact there is an Openskies agreement in place since 2002, but apart for some small exceptions, it is mostly to regulate military traffic. I found a draft of the phase 2 of the agreement on the EU official site, but that was published in March 2010 and it is only a draft. I did not have the time to read it before posting but i will.

And Sami, it is curious that you mention that the reason for not allowing hubs from airlines based in Hong Kong, is that it happens irl when i've always been posting my opinion that the game should be as realistic as possible and all sorts of artificial measures have been put into place to balance the game, just like the gaps between new aircraft deliveries. Like Boeing or Airbus would actually say to a customer willing to pay 40% of an order in the moment that " We are sorry but we must keep some slots just in case someone else wants to buy them".

Ok, let me just set you straight with Lufthansa ITALIA: they are based in MXP and only have A319s atm, so Milan to JFK is a little out of range for those planes. and I know for a fact that they do NOT fly through Frankfurt because they are BASED in Milan, and they don't even FLY to Frankfurt. also, The open skies agreement was not to regulate military traffic, because if they wanted to regulate military traffic they would've just put up military corridors in the air or put up "non-military" corridors so that busy intersections around Europe's busiest airports aren't clogged with extra flights because they put up military corridors over certain busy areas. not to mention, the open skies agreement was introduced in 2002, so why would they post a draft of it in 2010? Also, just because you're opinion says that you should be able to base in both HKG and China, doesn't mean that it will happen. I think you really have to wake up and smell the fresh, smog-filled air of real life because what happens in real life won't change because you think it should be different. Granted, if you have the authority to do so, then by all means but mark my words, chaos will ensue if you change what is already working, and has been working for over 65 years. And about the "artificial measures" stuff, that's a bunch of hogwash. (sorry for the harsh words ) Yes, sami has added some artificial means of doing things that differ from RL, but it's only because it's a game BASED on RL. Not everything is EXACTLY like it is because there would be simply too much micromanagement and would be VERY time consuming, which is impossible for some people, like me. and, Boeing and Airbus DO say "we need to save slots for other airlines so we're going to space them out in the time it takes to make one so that when we deliver one to you, another one will be starting to be built". That's how RL works.

[DenisG]

I confirm that you don't need to create a separate entity to operate in a foreign country. That's not only true for aviation but also for any form of business.

If a company operates in a different country (has employee, offices and so on...) it is called a stable establishment or a branch. A branch and is a part of the legal entity and is taxable in a country were it is located.

With all respect, a stable establishment or a branch is a legal entity. It needs to provide a monthly income statement and if assets are available a balance sheet (for profit-reducing depreciations) at least yearly. The income statement every month for e.g. VAT taxation or pre-profit payments. Every legal entity has an owner, may it be a 'natural person' or a 'jurisdical person' (that's what they call it in German at least). You have to do this because otherwise you could  easily tranfer the profits from the different jurisdictions to where it's nice and cheap (European Union). In order to avoid this, this transfer price regime has been installed. We even had to formally divide one person's salary as she was working around 1/3 of the time for the French affiliate and 2/3 in Germany. So the salary went 2/3 into the German entity's income statement with German employee benefits, and the 1/3 went into the French one with French employee benefits. She got the same amount, but legally, you have to divide it exactly. It was not our idea, but the local French public finance department got us on that issue, we did not even know of.

Therefore, even the maintenance department of an airline is in all cases I know of, a different legal entity.
Denis