A flag carrier is a transportation company, such as an airline or shipping company, that,
being locally registered in a given state, enjoys preferential rights or privileges accorded
by the government for international operations.
The term also refers to any carrier that is or was owned by a government, even long after
their privatization.
Flag carriers may be known as such due to maritime law requiring all aircraft or ships
to display the state flag of the country of their registry.
A flag carrier may also be known as a national airline or a national carrier, although this
can have different legal meanings in some countries.
Background The first definition is rooted in the fact
that pursuant to Article 17 of the Convention on International Civil Aviation aircraft have
the nationality of the state in which they are registered.
U.S. law) requires American air carriers to operate aircraft registered in the United
States and most countries have similar laws.
Thus when an airline operates an international route, between two countries, having been
designated pursuant to a Bilateral Air Transport Agreement any crime that would be committed
on board would be prosecuted under the laws of the airline's state.
Article 3 of Tokyo Convention declares that "The State of registration [of the aircraft]
is competent to exercise jurisdiction over “offenses and acts committed on board.”"
Therefore the aircraft is truly carrying the flag of its country.
The American definition of "U.S.-flag air carrier service" contained in 48 CFR 47.403-1.
is based on this first definition.
The U.S. requirements under the Fly America Act, are consistent with requiring that Title
18 of the United States Code would protect U.S. government employees on flights to foreign
countries.
The second and more broadly used definition of "flag carrier" is a legacy of the time
when countries established state-owned airline companies.
Governments then took the lead due to the high capital costs of establishing and running
airlines.
However, not all such airlines were government-owned; Pan Am, TWA, Cathay Pacific, Union de Transports
Aériens, Canadian Pacific Air Lines and Olympic Airlines were all privately owned.
Most of these were considered to be flag carriers as they were the "main national airline" and
often a sign of their country's presence abroad.
The heavily regulated aviation industry also meant aviation rights are often negotiated
between governments, denying airlines the right to an open market.
These Bilateral Air Transport Agreements similar to the Bermuda I and Bermuda II agreements
specify rights awardable only to locally registered airlines, forcing some governments to jump-start
airlines to avoid being disadvantaged in the face of foreign competition.
Some countries also establish flag carriers such as Israel's El Al or Lebanon's Middle
East Airlines for nationalist reasons, or to aid the country's economy, particularly
in the area of tourism.
In many cases, governments would directly assist in the growth of their flag carriers
typically through subsidies and other fiscal incentives.
The establishment of competitors in the form of other locally registered airlines may be
prohibited, or heavily regulated to avoid direct competition.
Even where privately run airlines may be allowed to be established, the flag carriers may still
be accorded priority, especially in the apportionment of aviation rights to local or international
markets.
In the last two decades, however, many of these airlines have since been corporatized
as a public company or a state-owned enterprise, or completely privatized.
The aviation industry has also been gradually deregulated and liberalized, permitting greater
freedoms of the air particularly in the United States and in the European Union with the
signing of the Open Skies agreement.
One of the features of such agreements is the right of a country to designate multiple
airlines to serve international routes with the result that there is no single "flag carrier".
List of flag-carrying airlines The chart below lists airlines considered
to be a "flag carrier", based on current or former state ownership, or other verifiable
designation as a national airline.
Notes and references
Notes ^ SAS is partly owned by the governments of
Denmark, Norway and Sweden, and is the flag carrier for all three nations.
References
External links International Air Transport Association
US Maritime Administration