Foreign Ownership & Control and Cabotage
Limits on foreign ownership and foreign control and a prohibition on cabotage operation by foreign airlines are core components of the regulatory structure that applies to the U.S. airline market. These regulations ensure the national security of our country and the integrity of our airline industry.
By regulation, U.S. airlines must be at least 75 percent owned (as a percentage of shares) and effectively controlled (as a percentage of voting-stock) by U.S. citizens. Additionally, two-thirds of an airline’s governing board and its lead executive officer must be U.S. citizens. A key objective of these requirements is the maintenance of our national defense, and the Department of Defense has long been a strong supporter of the foreign ownership and control rules. U.S. airlines, especially those involved with the Civil Reserve Air Fleet, have obligations to our military in times of crisis. Our carriers provide essential airlift for military personnel and cargo. Should ownership or actual control of an airline drift outside of U.S. control, so would these resources.
Cabotage, a term of art in the international aviation and maritime industries, refers to commercial operations wholly between two domestic points. Foreign carriers are prohibited from conducting cabotage services in the United States. For example, Air France may not carry paying passengers between New York and Chicago.
If cabotage were to become legal, it would be the only instance where a foreign company could operate under foreign laws and regulations 100 percent inside of the United States. Cabotage protections are designed to apply to the aviation industry the same standard that every other U.S. industry enjoys.
- The U.S. government should maintain all foreign ownership & control regulations, as well as all cabotage laws.