Cabotage

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Cabotage is the transport of goods or passengers between two points in the same country. Originally starting with shipping, cabotage now also covers aviation, railways and road transport. Cabotage is "trade or navigation in coastal waters, or, the exclusive right of a country to operate the air traffic within its territory."[1]

Cabotage is commonly used as part of the term "cabotage rights," the right of a company from one country to trade in another country. In aviation terms, it is the right to operate within the domestic borders of another country. Most countries do not permit cabotage by foreign companies, although this is changing within Europe for member states of the European Union.[2] Politically, cabotage regulations restricting trade to domestic carriers are a form of protectionism. Justifications for cabotage regulations include national security and the need to regulate public safety.

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[edit] Examples

If British Airways has a flight from London Heathrow that stops at New York JFK and continues on to Chicago O'Hare, it would not allow passengers to board in New York and fly to Chicago if that violated U.S. cabotage regulations. Only passengers who boarded in London could be carried on to Chicago.

As another example, a passenger would not be able to buy a ticket on Air Canada for a flight from Boston to Toronto, connecting in Toronto to another flight to Seattle. Even though each of the legs would be legal individually, together they effectively offer a domestic service in the U.S.

[edit] Cabotage trade

Cabotage trade is a political term describing the "coastwise trade of a nation to vessels flying its national flag". Usually, industrial countries have special laws pertaining to trade and travel of goods and persons in their own waters when the ship carrying them is registered domestically. These laws, commonly called "cabotage laws (acts)", give concessions to local vessels by restricting port and waterway usage by vessels with foreign registrations "to promote the development of indigenous tonnage..."[3]

Initially, laws like these will protect domestic businesses by giving them an advantage over exportation. Later, this will increase the country's income via taxes and fees collected from foreign businesses. The country will receive more income, when foreign businesses decide to register their vessels domestically.

To circumvent such laws and taxes, global businesses register their vessels with small island nations, which have less transport restrictions and are taxed at a lower rate than their home nation.

Each country has its own laws and regulations regarding cabotage trade.

[edit] Cabotage in passenger aviation

Australia and Chile[4] allow passenger airlines owned by foreign entities to operate domestic flights.[citation needed] Until 1991, Lufthansa was prohibited from flying into West Berlin. Pan Am, British Airways, and Air France operated routes between the Federal Republic of Germany and West Berlin. For a short time in the late 1980s, TWA also flew between then-West Germany and West Berlin. During this time, Pan Am flew to Tegel, in Berlin, from Munich-Riem Airport (now closed) and Frankfurt. Air France flew from Düsseldorf. British Airways flew from Munster/Osnabrück, Hannover, and some other cities.

In October 2007, the United Kingdom granted Singapore carriers to fly domestic UK routes as part of an open skies agreement. British carriers were allowed the rights to fly to any city from Singapore. [5]

[edit] References

  1. ^ The American Heritage Dictionary of the English Language, Fourth Edition
  2. ^ "European transport policy for 2010: time to decide" EU Commission White paper
  3. ^ Nigerian Bar Association, August 2004 "Practical Implementation of the Cabotage Law". Retrieved June 14, 2006.
  4. ^ celex-txt - 52005DC0406
  5. ^ Channelnewsasia.com

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