"National airlines" redirects here. For airlines named National Airlines, see National Airlines. A flag carrier refers to a transportation company, such as a shipping or airline company, that is locally registered in a given country. They may be state-run, state-owned or state-designated companies or organisations with preferential rights or privileges accorded by the government. 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.[1]
A flag carrier (if it is an airline) may also be known as a national airline or a national carrier, although this can have different legal meanings in some countries. In the United States for example, a national carrier (or airline) must have an annual operating revenue between $100 million and $1 billion.
Background
The term "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. The heavily regulated aviation industry also meant aviation rights are often negotiated between governments, denying airlines the right to an open market. These bilateral aviation agreements may 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 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. Governments may dictate that all state-linked travel be conducted only on flag carriers.
In recent decades, however, many of these airlines have since been corporatised as a public company or a state-owned enterprise, or completely privatised. The aviation industry has also been gradually deregulated, particularly in the United States and in the European Union. This has rendered the designation of "flag carriers" less important than it was in the past.
The legacy of flag carriers can still be seen by the restrictions in international air travel through bilateral in 1945 (Bermuda I) but revised in 1977 (Bermuda II) to redress the balance of air service advantage by limiting the number of airlines which could operate on certain routes. Some countries (notably the United States) have legislation that requires the use of a national flag carrier, where possible, when travelling using government funds. One example is the Fly America Act. The mass media may also routinely uses the term to loosely refer to any dominant airline in a country, or in reference to legacy state carriers even long after their privatisation.[2]
List of national flag carriers
The chart below lists airlines considered to be a "flag carrier", either by designation as a national airlines either officially or based on history and whether it is state-owned.
Notes
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