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cabotage
Bilateral agreements are based on the " freedoms of the air", a group of generalized traffic rights ranging from the freedom to overfly a country to the freedom to provide domestic flights within a country (a very rarely granted right known as <anchor>cabotage</anchor>). Most agreements permit airlines to fly from their home country to designated airports in the other country: some also extend the freedom to provide continuing service to a third country, or to another destination in the other country while carrying passengers from overseas.
Cabotage - Wikipedia
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# Cabotage

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From Wikipedia, the free encyclopedia

Transport within a country by an operator from another country

Not to be confused with Sabotage.

Cabotage (/ˈkæbətɪdʒ,-tɑːʒ/) is the transport of goods or passengers between two places in the same country. The term originally applied to shipping along coastal routes, port to port, but now applies to aviation, railways, and road transport as well.

Cabotage rights are the right of a company from one country to trade in another country. In aviation, it is the right to operate within the domestic borders of another country, particularly to carry passengers and cargo from one point in the other country directly to another point in the same country. Most countries do not permit aviation cabotage, and there are strict sanctions against it, for reasons of economic protectionism, national security, or public safety. One notable exception is the European Union, whose member states all grant cabotage rights to each other.[1]

## Etymology

The term "cabotage" is borrowed from French. It is derived from caboter which means "to travel along the coast". The origin of caboter is obscure: it may come from cap or cabo "cape", or it may refer to a type of boat. Attempts to link the name to the Italian explorer Cabot are not supported by evidence.[2]

## In shipping

Cabotage laws apply to merchant ships in most countries that have a coastline so as to protect the domestic shipping industry from foreign competition, preserve domestically owned shipping infrastructure for national security purposes, and ensure safety in congested territorial waters.[3]

Indonesia implemented a cabotage policy in 2005 after previously allowing foreign-owned vessels to operate relatively freely within the country.[4]

In the Philippines, the Tariff and Customs Code of the Philippines (Republic Act No. 1937) which is also known as the Cabotage Law restricts coastwise trade or the transport of passengers and goods within the country, to vessels with Philippine registry which has to secure a coastwise license from the Maritime Industry Authority. After the passage of Foreign Ships Co-Loading Act or the Republic Act No. 10668 in 2015, foreign vessels with cargo intended to be exported out the country may dock in multiple ports in the country before transiting to a foreign port.[5]

China does not permit foreign flagged vessels to conduct domestic transport or domestic transhipments without the prior approval of the Ministry of Transport.[6] While Hong Kong and Macau maintain distinct internal cabotage regimes from the mainland, maritime cabotage between either territory and the mainland is considered domestic carriage and accordingly is off limits to foreign vessels.[6] Similarly, maritime crossings across the Taiwan Strait requires special permits from both the People's Republic of China and the Republic of China and are usually off-limits to foreign vessels.[6]

In the EU, rights to cabotage in newly admitted member states (in particular, Greece, Spain and Portugal) were restricted;[7] but this introductory provision was abandoned after criticism in the light of the Paros ferry disaster.[8]

The Hague–Visby Rules, a convention which imposes duties on maritime carriers, apply only to "carriage of goods by sea between ports in two different states", and thus do not apply to cabotage shipping.[9] However, section 1(3) of the UK Carriage of Goods by Sea Act 1971 declares that the Rules "shall have effect … where the port of shipment is a port in the United Kingdom, whether or not the carriage is between ports in two different States …".

### United States

In the United States, the Merchant Marine Act of 1920 (Jones Act) requires that all goods transported by water between U.S. ports be carried on ships that have been constructed in the United States and that fly the U.S. flag, are owned by U.S. citizens, and are crewed by U.S. citizens and U.S. permanent residents. The Passenger Vessel Services Act of 1886 states that no foreign vessels shall transport passengers between ports or places in the United States, either directly or by way of a foreign port.

A vessel satisfies the “U.S. built” requirement if:[6]

- “all major components of its hull[a] and superstructure are fabricated in the United States”
- assembly of the vessel occurs “entirely in the United States.”

The requirements of the Jones Act apply to transport between:[6]

- all points in the territorial sea, within three miles of the coast,
- points in internal waters of the United States,
- the island territories and possessions of the United States.
- pursuant to the Outer Continental Shelf Lands Act, the requirements also apply to structures attached to the American outer continental shelf for the purpose of exploration, development, or production of natural resources.

## In passenger aviation

Cabotage rights remain rare in passenger aviation. The Chicago Convention prohibits member states from granting cabotage on an exclusive basis, which has limited the availability of cabotage as a bargaining chip in bilateral aviation agreement negotiations.[10] Cabotage is not granted under most open skies agreements.

### European Union

Carriers licensed under EU law are permitted to engage in cabotage in any EU member state, with some limitations.[11] Ryanair, easyJet, Vueling, Wizz Air, and Aer Lingus have bases and operate domestic services outside their home countries.

### Australia and New Zealand

Australia also permits foreign-owned airlines incorporated under Australian law (such as the domestic arm of Virgin Australia) to operate on domestic routes, although it prohibits such airlines from operating international routes as Australian flag carriers. They can, however still operate international routes if they are operated by an Australian-owned subsidiary.

### Chile

Chile has the most liberal cabotage rules in the world, enacted in 1979, which allow foreign airlines to operate domestic flights, conditional upon reciprocal treatment for Chilean carriers in the foreign airline's country. This unusual regime is partly due to Chile's geographical need for air service, and partly to incentivize liberalization in other countries amid the international expansion of its flag carrier LATAM Chile, which now has major operations in many other Latin American countries.[10] Like Australia, Chile allows foreign companies to set up Chilean subsidiaries to offer domestic flights in Chile, regardless of reciprocity.[12]

### Other examples

In October 2007, the United Kingdom granted Singapore carriers the right to fly domestic UK routes as part of an open skies agreement, which also allows British carriers to fly to any city from Singapore.[14]

Reciprocal cabotage rights exist by treaty between New Zealand and Brunei, and between the People's Republic of China and Albania.[10]

## In road transport

The European Union allows limited cabotage for road transport. A non-resident carrier which has driven to another EU country is allowed to pick up and deliver a further load inside the host country before returning to the border.[15]

## Related concepts

### "Modified sixth freedom"

The "modified sixth freedom" refers to the right to carry passengers between two points in country A through a hub in country B; for instance, a Boston-Toronto-Seattle itinerary.[16] Such services are currently considered to constitute cabotage and are not permitted.[17] In 2002, the United States fined Asiana Airlines for selling tickets from the mainland US to Guam and Saipan via Seoul.[18]

### Tag rights

Certain airlines operate services within a foreign country without the right to carry local traffic. For instance, Qantas operates service between New York and Los Angeles solely for use by international connecting passengers. Such services are not generally considered to be cabotage.

## Notes

1. ^A component is “major” if it exceeds 1.5 percent of the vessel’s steelweight. A component is deemed part of the hull if it forms part of the watertight envelope of the vessel.

## References

## External links

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