flags of convenience

[deptrai]

Norwegian, currently the third largest loco in Europe, is considering to register it's new Dreamliners in Ireland, "to become more competitive" (which I assume means employing "offshore" crew, at lower salaries and less attractive conditions, avoiding Norwegian labor law).

There is nothing wrong with Ireland, they have professional airlines, and a professional registry...yet Norwegian doesn't have any connection with Ireland. Norway is a high-cost country, with relatively strict labor laws (a socialist nanny state if you want), and this seems to be a purely cost-based decision, just like Microsoft and numerous other companies (including airlines) who already employ a large amount of call centers agents serving other countries in Ireland.

Ireland already attracted some Spanish, Italian, Swedish and UK Aircraft...and Air Mongolia, Russian airliners from KD Avia, TransAero, AirUnion (KrasAir) are on the list, as far as I know.

Flags of convenience have been used for merchant ships since the 1950ies, where crews on international voyages are largely recruited from (very) low cost countries, and offshore registries - often for tax and/or licensing issues, eg - are not uncommon for business jets. There is a mushrooming cottage industry of micro-states, some of which don't even have airports, like San Marino - which offer "competitive" aircraft registration, looking to expand into the commercial aviation registry "business". So far shopping around for "better" conditions hasn't been very common for larger, scheduled airlines (maybe except the Aeroflot A320s). Is this the beginning of a new development? In 20 years, will we see more crews working at "offshore" conditions, based out of Asian cities, training funded through bonded slavery contracts and/or PTF schemes, flying in Europe and the US, in aircraft registered in places Bermuda, San Marino, Liberia and the Isle of Man? What could be next, operators shopping around for AOC's to circumvent safety blacklists?

[Goat Whisperer]

I think you'd find many Irish registered aircraft are Irish owned. There are, stemming from even before Ireland's days as "Celtic Tiger" hub of international finance, several strong aircraft leasing business based there. Often these companies are reluctant to have their assets registered in client countries because 1) that puts their continuing airworthiness under the scrutiny of a local regulator and 2) it could make repossession difficult in the even the deal turns sour. Kingfisher, anyone?

[vfenext]

that puts their continuing airworthiness under the scrutiny of a local regulator
Any local regulator has the right to scrutinise the airworthiness of aircraft arriving in it's state.

[JanetFlight]

Deptrai...i've read your article with much attention, but respectfully i humble think you are a lil' ''outdated'' regarding examples given.

There is no such airline named "Air Mongolia", and both KD Avia and Union(Kras) stopped flying many years ago.

Regarding the convenience Reg. Countries, AFAIK there is only one or 2 bizjets registered in San Marino, and about Liberia since the good old pair of L1011 freighters on the new prefix=A8 (after historic EL), not a single plane got any Liberian registration....these L1011 refers to the last flights made around big Asian Tsunami some years ago...iirc, just my 2 cents.

[deptrai]

JanetFlight - for the sake of pure sensationalism :} I did a quick google search which yielded "Air Mongolia" (could be Aero Mongolia) and a few other which supposedly were registered in Ireland, yet as you point out may no longer operate under the same name. Exotic names in aviation isn't my hobby, forgive me for any mistakes :) My main point was Norwegian though, and I'm wondering if we will see more bigger operators considering such moves.

[toffeez]

I'm not a lawyer, but I dont think you can just 'register a plane' in a country. You have to register a company first.

To benefit from European route rights (i.e. can fly between any two airports in the EU) an operator has to be majority owned by EU citizens.
.

[WHBM]

Norwegian, currently the third largest loco in Europe, is considering to register it's new Dreamliners in Ireland, "to become more competitive" (which I assume means employing "offshore" crew, at lower salaries and less attractive conditions, avoiding Norwegian labor law).
The entire recent Russian airliner fleet and more than 50% of the Italian one are registered overseas, along with many others. Ireland is a principal place for this but by no means the only one. However in the cases I describe the crews still come from the native country, not significantly from overseas. Its done for different, financial back-office reasons, mainly to do with asset protection by the leasing companies.

[cldrvr]

There are several reasons for Irish registry. Originally the registry was simplified when Guinness Peat had its leasing business there. Then during the 80's-90's Ireland wanted to attract more business that would domicile there while operating/owned in Europe, or those offshore companies that wanted a European presence, all part of the Celtic Tiger (let's not talk about how the tiger drowned...) growth strategy.

Ireland has good double taxation treaties within Europe, secures the ownership of the leasing company, IFLC uses it a lot too for that reason. Furthermore Ireland allows foreign, think offshore companies, to register anything from Aircraft to financial funds.

So don't think that Norwegian would just use the Irish register to circumvent local employment laws, it is purely done as it is the most favourable and affordable registry in Europe.

[Agaricus bisporus]

And from personal experience "rules" are flexible, optional and the blind eye is widely, if not universally employed. The IAA is a poodle with rubber teeth.

[cldrvr]

I am not closely familiar with bankruptcy/possession law in Norway, but to understand why they would choose Ireland, you first need to investigate Norway.

Italy is a prime example, the leasing company is responsible for the bills accrued by its aircraft there so no leasing company would register aircraft in Italy just in case the airline goes bust, they would struggle getting their airframes back and they would be liable for the bills accrued by that aircraft.

So if you want the real reason why Norwegian/the leasing company chooses Ireland you need to retain yourself an accountant and a lawyer and have them write a brief for you describing the differences and advantages of each.

If you are just posting here to sh!t stir, then by all means go ahead and I will step aside.

[One Outsider]

So don't think that Norwegian would just use the Irish register to circumvent local employment laws, it is purely done as it is the most favourable and affordable registry in Europe.O'Leary of the Fjords have quite clearly stated that if they are not allowed to use cheap asian labour on their long-haul fleet, which current Norwegian law does not allow, they will not register the aircraft in Norway.

[cldrvr]

O'Leary of the Fjords have quite clearly stated that if they are not allowed
to use cheap asian labour on their long-haul fleet, which current Norwegian law does not allow, they will not register the aircraft in Norway


do you have a reference/quote for that one or are you just making stuff up as you go along.

[One Outsider]

Were you born rude or just raised that way?

For your education:

Norwegian får ikke sin vilje, antyder utflagging - (http://www.aftenposten.no/okonomi/Norwegian-far-ikke-sin-vilje_-antyder-utflagging-7093491.html)

Aftenposten (http://www.aftenposten.no/okonomi/Norwegian-far-ikke-sin-vilje_-antyder-utflagging-7093491.html) Truer med utflaggingover fagforeningskravene - Næringsliv - E24 (http://e24.no/naeringsliv/norwegian-truer-med-utflagging-over-fagforeningskravene/20276424)

etc...

[racedo]

What a load of ill informed garbage with a spurious title.

Registry of aircraft and its lease owners has SFA to do with how or where an airline operates.

Spanair operating from Barcelona had aircraft leased from Irish leasing companies, Sky Europe likewise, Malev and many other airlines across Europe had, have and will continue to have in the future.

A claim that somehow because the owners of the aircraft have registered their asset in a country before leasing to a company impacts on how the airline operates is laughable.

Where the airline is registered is where the AOC is applicable and has no bearing on the aircraft used.

GPA was one of the forerunners of Aircraft Leasing and following on from this an industry developed in Ireland specialising in this, helped by Irish Govt economic policy and low taxation.

I am not aware that because an aircraft is registered in one country it automatically prevents a 3rd country from inspecting or having anything to do with how the aircraft is operated. It has never been the case yet nor ever likely to be the case.

This thread belongs in the bin.

[cldrvr]

Were you born rude or just raised that way?


I'd rather be rude than live in that fantasy world of yours.

Now let's get back to subject.

Find a reference, and not from the gutter press, stating that Norwegian is going to move its AOC, company, headquarters and all personnel to Ireland because that is what it would take to be covered under Irish regs.

Just because the lessor, in this case ILFC is going to register its aircraft in Ireland, and Norwegian may well follow suit for some of its own aircraft, has bugger all to do with the operating company.

[Finn47]

Moving the company and headquarters may be easier than you´d think, since it´s a separate company, Norwegian Long Haul A/S. Do not underestimate Björn Kjos, the CEO. He´s been doing remarkably well so far.

[A319]

Norwegian vil flagge ut til Irland - DN.no (http://www.dn.no/forsiden/naringsliv/article2602632.ece)

[deptrai]

Norwegian airline mulls Irish registries to cut costs - Yahoo! Singapore Finance (http://sg.finance.yahoo.com/news/norwegian-airline-mulls-irish-registries-111737494.html)

[cldrvr]

Moving the company and headquarters may be easier than you´d think, since it´s a separate company, Norwegian Long Haul A/S. Do not underestimate Björn Kjos, the CEO. He´s been doing remarkably well so far.

Going by the posts here, entrepreneurs like that are not welcomed in Norway, he should just pick up sticks and move the whole lot to Ireland, they would welcome him with open arms.

He probably does not give a toss where he is based.

[deptrai]

So if you want the real reason why Norwegian/the leasing company chooses Ireland you need to retain yourself an accountant and a lawyer and have them write a brief for you describing the differences and advantages of each.

cldrvr first you claim to know the "real reason", and go on to uninformed ramblings and wild speculatioms about "leasing". you seem to be making this up yourself, without any sources at all, yet then you challenge other, clearly better informed people than you to post their sources:

do you have a reference/quote for that one or are you just making stuff up as you go along.

and finally you bring up Denmark (?), which has nothing to do with this topic (Hint: the company is called NORWEGIAN).

If you are just posting here to sh!t stir, then by all means go ahead and I will step aside.

The above taken into account, I think you're the one stirrring up **** in this thread. I'm glad you have enough insight to step aside. Now would be a good time.

Back on topic: I was merely wondering if this will be a trend. With further locos starting long haul operations, it's only a question of time before they come up with new creative cost cutting measures.

[Peter47]

Is it a case of the aircraft being registered abroad for financial reasons or operating through an overseas subsidiary?

The former is very common. Many years ago spotting at ZRH I saw a Swissair 747 with an N rather than HB registration, doubtless owned by an American financial institution. The operations would have been no different to an HB registered aircraft, although as a previous post has mentioned the US authorities would have a regulatory interest.

Obviously if they are to be operated by an Irish based subsidiary that would be a further step, but it is not clear that this is to be the case.

[cldrvr]

but it is not clear that this is to be the case.


Yes it is, they are leasing them from IFLC, they generally register their leased aircraft in Ireland.

Nothing to see here, there is no story, just chicken feed for the gutterpress

[WHBM]

There are a range of reasons for overseas registration.

All the Boeing/Airbus aircraft in Russia registered overseas (Bermuda is a favourite, but Ireland also) are due to an import tax on non-Russian manufactured aircraft, which this avoids.

In Italy, and some other places, bankruptcy laws can leave a big liability to leasing companies if the airline goes bust.

Elsewhere just the legal logistics of getting aircraft out of the country again if the lease is not paid on a domestically-registered aircraft causes it.

Some countries have regulatory issues with non-national pilots and/or licences which it overcomes.

[Metro man]

The Isle of Man is a increasingly popular registrar for business jets, as is Bermuda.

Back in the old days of Guinness Peat, Irish registered aircraft would be found all over the world.

Western socialist nanny states will soon have their aviation sectors in the same condition as their car industries. Overburdened with regulations, unproductive workers, high cost and unable to compete with Asia.

Compare the likes of KLM, Air France, Iberia, Alitalia with Emirates, Singapore Airlines, Qatar.

[HOMER SIMPSONS LOVECHILD]

There are none so blind as cannot see.
For those of you who reckon there is "nothing to see" here or that this issue is a mere administrative nicety, I suggest you look at the Merchant Navy( from whence the practice and nomenclature originate )
In the 60's the world fleet was dominated by British and Northern European flagged ships . I'll use the British fleet as an example but you could substitute any of the traditional maritime states.
Ship's officers were well respected in society and a Captain or Chief Engineer was a position of prestige and reward.
Cunard,P & O, Union Castle, Blue Flue, Bank Line,Blue Star,Furness Withy, Port Line, Clan Line, Ben Line, and a multitude of others were household names and dominated world trade.
All the senior officers were British , as were most of the ratings and lower ranks.
The passenger trades were crewed by british stewards and catering staff from top to bottom with a few exceptions.
Companies had in house indentured cadetship schemes to ensure a supply of highly trained and qualified personnel rising up the ranks.
Fast forward 50 odd years.
Virtually no international trade is carried on British ships and a British Captain or senior officer is rarer than hen's teeth. There are no british ratings to be found even on the home trades. Your ferry from Dover to Calais is likely to be registered in the Bahamas,have a Polish skipper and Filipino crew. The Red Ensign has re-emerged after virtual extinction but is itself now a "Flag of convenience" . That huge container ship you saw sailing up the Solent with the London registration is unlikely to have a single Brit or commonwealth person on board. Supply boats based in Aberdeen are manned by Eastern European officers and third world crews. They trade exclusively within UK waters.
Fast forward 20 odd years.
Heathrow is lined with wide body jets on Irish,Icelandic,Lithuanian, Panamanian or Timbuctoo registrations. The flight crew are from Eastern Europe or the Far East. The cabin crew are Filipinos on three year contracts who stay in a large dorm in Slough, work to Panamanian FTL's and get paid 30% what a british hostie would accept. They operate LHR-JFK-LHR then have a day off. The Brit hostie is extinct.
Your holiday jet to the sun will be similarly operated but from a point even further down the food chain.
The regionals will be crewed by P2F Ukrainians trying to get onto the job ladder or rejects from the "New Majors"
A few older Brit management pilots will hold key posts in offices and provide cast iron procedures and processes for their cheap third world crews to follow. They themselves will eventually die off as nobody will be rising through the ranks to replace them.
It's coming folks!

[toffeez]

Yes, she probably died of old age. If a filipina is good enough for Cathay Pacific, she's good enough for me.

[HOMER SIMPSONS LOVECHILD]

And how about the P2F skipper on your holiday flight. Is he OK with you too?
After all he'll be good enough for Lion O'leary Jet.:ugh:

[Sunnyjohn]

Strange, then, that the last passenger ship to founder was an Italian ship, registered in Italy and crewed by Italian officers.

[HOMER SIMPSONS LOVECHILD]

No, hundreds of ships have foundered since the Costa Concordia,including several passenger ships.
It's just that the deaths of lots of foreign brown poor people in far away countries is not really considered newsworthy in the west. ( how many have heard of the Dona Paz ?- google it )
Now lots of prosperous Europeans just like us and a dodgy Italian skipper , thats a story!

[Sunnyjohn]

HSL you missed my point but no worries.

[captplaystation]

As HOMERS LOVE CHILD said "none so blind as those that will not see", anyone who thinks of ILFC ownership being the driving force in seeking Irish "jurisdiction" is deluding themselves.


Air authorities powerless over Norwegian move / News / The Foreigner ? Norwegian News in English. (http://theforeigner.no/pages/news/air-authorities-powerless-over-norwegian-move/)

[ShotOne]

It's a pity this thread has mostly dissolved into pointless bickering.... because this is a massive issue which should concern anyone with a stake in aviation - even as a passenger. Aviation is only safe because of the professional attitudes of those employed in it and the oversight of national authorities. Flag of convenience operations diminish both of these.

[despegue]

The remarks regarding Merchant Navy are outdated.
Insurance companies have taken action in the meantime and National Legistlations in various EU countries have made it easier and more lucrative to rebase ships in a EU country.
Ships do have EU deck and Engine officers, moreover, there is NO unemployment once graduated, you are very much needed. salaries have gone up a fair bit too.
Insurance companies require a certain percentage of Western well educated Officers onboard.
Shipping is our sister profession, we should work together, as Navigational Officers to make sure our lives and profession is regarded with esteem.
Shame that in Aviation, the Insurance companies are not yest seeing the light regarding Pay to fly.

[Bokkenrijder]

It's coming folks! Isn't this already here? UK and Irish low cost airlines operating in Europe, undercutting locally based airlines with P4T contract pilots and Eastern European P4T cabin crew? :}

Oh wait...they're from one of those English speaking islands in the Atlantic teaching those lazy, unionized, socialist main land Europeans a lesson, so then it must be okay, right? :=

[toffeez]

Funny isn't it? The continentals are the strongest supporters of a federal Europe with the same rules and rights for everyone across the union.

When someone uses those rights to fly anywhere in the EU it's suddenly unfair. No-one needs high-cost carriers. Their time is up.

[Bokkenrijder]

You obviously don't see that that what's coming, is already there. The UK or Irish flag is very convenient in continental EU, but now it's our fault, right? :hmm:

Many people in the EU have never neither directly voted for any of those people in Brussels or Strasbourg nor for the laws that they crunch out, if you need a reminder then have a look on Youtube for Nigel Farage videos.

Actually it's quite similar to what has happened in the UK construction industry and how many were driven out of business by Eastern Europeans willing to work for cash in hand undercutting the British carpenters/builders. But please, don't let that stop you from flaming the EU. ;)

One votes for politicians that end up stabbing you in the back, it's universal, not something uniquely reserved for the EU(SSR)! :}

When someone uses those rights to fly anywhere in the EU it's suddenly unfair. No-one needs high-cost carriers. Their time is up. When you get a little bit older you might understand one day how the world works.

[racedo]

Ah Now Ted

No such think as a flag of convenience in relation to aviation and claims that such exist are nonsense. Every country has a right to inspect planes using their territory and attempts to claim that its other countries airline is the problem avoids looking at their own industry.

Death rate of passnegers among LCCs is pretty much no existent where as Legacys over same period seems to be quite significantly higher.

[caiman27]

Surely the real issue is that the LoCo's have found a whole new market? As far as I'm aware, the established European LoCo's have never had a flying-related passenger fatality? That's a business model that works at every level.

Passengers happy enough to rebook. Company owners happy enough to stay with the business. Employees not sufficiently unhappy that they leave in numbers that disrupt the business.

The rest is simply noise.:cool:

[racedo]

Surely the real issue is that the LoCo's have found a whole new market? As far as I'm aware, the established European LoCo's have never had a flying-related passenger fatality? That's a business model that works at every level.

Passengers happy enough to rebook. Company owners happy enough to stay with the business. Employees not sufficiently unhappy that they leave in numbers that disrupt the business.

The rest is simply noise.http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/cool.gif

Course it is but people from legacy carriers want to get impression out there that it is LCCs that are unsafe while covering up their own often questionable standards.

Easier to demonise someone else.

[spotfx]

Remember that there is an important distinction between the jurisdiction of the legal owner of the aircraft, the place of registration of the aircraft and the jurisdiction of the operator and their air operator certificate.

The jurisdiction of the legal owner of the aircraft is often (but not always)dictated by where the aircraft will be registered (e.g. FAA N-reg aircraft generally need to be owned by US-incorporated companies, financiers or trustees, but there are ways around this).

The place of the register (for airliners, at least) is dictated frequently by the ease of registration (and enforcement) of the aircraft mortgage in that jurisdiction by a financier. Ireland is particularly popular given that it is a signatory to the Cape Town Convention and it is very easy to register and if necessary enforce a mortgage over the aircraft and retake possession. I would shudder to think how painful it would be to enforce a mortgage over an aircraft registered in Russia (for example). It’s actually messy to enforce an aircraft mortgage in many European jurisdictions (Italy is just one example), hence why Ireland is such an attractive place to register an aircraft.

Some US banks often feel more comfortable registering the aircraft in the US and taking a US-law mortgage, hence why you sometimes seem random foreign airlines with N-reg aircraft (often the case for aircraft operating in South American or the Mid-East)

(in the past there was also the “double-dip” and “triple-dip” tax-driven leasing structures that would involve ownership and/or registration and/or lessee or lessor in Germany and Japan, but these are pretty hard to achieve these days so aren’t a big factor anymore)

The jurisdiction of the operator is a whole different kettle of fish to where the aircraft isregistered, which is what I think people are most worked-up about.

The lien over an aircraft for unpaid Eurocontrol ATC and nav charges which a few people mentioned is levied on the aircraft regardless of where it is registered – whether the aircraft is registered within the EU or outside the EU makes no difference for Eurocontrol.

Flags of convenience for the shipping industry and the location of the register (and employment terms of those working on the ships) function differently to aircraft, so the comparisons aren’t quite the same.

[SMT Member]

What's really required, if the case is such that the pilot or cabin crew of NAX are unhappy about the 787 situation, is for them to go sit on their collective backsides and tell O'Leary of the Fjords his fleet stays grounded, until such time T&C on the new fleet have been negotiated with the present workforce. He can then proceed to register the aircraft on Mars, if that suits his financial jugglers.

Of course that's unlikely to ever happen, and until it does my level of sympathy for their "plight" shall remain somewhere between naught and not a lot.

[Facelookbovvered]

Racedo

Bet you haven't got the balls to name which Legacy companies you believe have questionable safety standards or any facts to back it up, which puts you in more or less the same camp as other who post crap about an individual airline culture.

I think one of the reasons the Lo Co sector has been so safe thus far is the new kit most are flying and the sheer frequency of flight and type of airports operated into really keep people on their toes.

But below the surface there have been a lot of close calls, in other words luck was on their side, it wont always be so, with that in mind it is useful if people flag up unsafe practices or work patterns/pressures, I'm not sure that P2F is any less safe than some of the very long commutes to bases well away from what most would call home, It is my personal view that no sick pay is the biggest threat to safety, but thankfully limited to a few companies at least for now, it should be outlawed throughout Europe, like wise a ratio of 75/25% employed -v- contract should be the min/max, that will cover any reasonable seasonality, what we have now is abuse.

[bluecode]

I think one of the reasons the Lo Co sector has been so safe thus far is the new kit most are flying and the sheer frequency of flight and type of airports operated into really keep people on their toes.

But below the surface there have been a lot of close calls, in other words luck was on their side, it wont always be so, with that in mind it is useful if people flag up unsafe practices or work patterns/pressures,I'm sorry but that's nonsense and indeed an insult to the pilots of lo co operators. Do you even work in the industry? I don't see how you can say that if you're actually a pilot. You are seriously uninformed. You simply cannot say it's pure luck that there haven't been many accidents. Luck has nothing to do with it. It is rare indeed that the an aircraft accident these days could be described as bad luck.

But all this is irrelevant to the point of this thread. Ryanair is not Irish registered because it's convenient. It's Irish registered because Tony Ryan was Irish. Tony Ryan is also part of the reason why Ireland has such a large population of leasing companies. He helped found GPA and that led in turn to dozens of other companies setting up shop. Mostly for good business reasons.

The fact of the matter is that Norway is an expensive place to do business so that almost anywhere else in Europe makes more sense to be based. It just so happens that they're leasing aircraft from an Irish leasing company, ILFC. It just makes good business sense. Instead of attacking another country's business practices may Norway would see fit to try and make it more attractive for inward investment. Or are they too rich with all that oil to care?

They have priced themselves out of it. Only they are to blame.

The fact and reality is that most of the flight crew will not be Norwegian and I suspect will not be in the mood to pay Norwegian taxes.

[racedo]

Bet you haven't got the balls to name which Legacy companies you believe have questionable safety standards or any facts to back it up, which puts you in more or less the same camp as other who post crap about an individual airline culture.

I read the T&Cs of this site so why waste my income on lawyers fees when not required.




I think one of the reasons the Lo Co sector has been so safe thus far is the new kit most are flying and the sheer frequency of flight and type of airports operated into really keep people on their toes.

But below the surface there have been a lot of close calls, in other words luck was on their side, it wont always be so, with that in mind it is useful if people flag up unsafe practices or work patterns/pressures, I'm not sure that P2F is any less safe than some of the very long commutes to bases well away from what most would call home, It is my personal view that no sick pay is the biggest threat to safety, but thankfully limited to a few companies at least for now, it should be outlawed throughout Europe, like wise a ratio of 75/25% employed -v- contract should be the min/max, that will cover any reasonable seasonality, what we have now is abuse.

Again your opinion and thats it.