Flag carrier


Flag carrier

A flag carrier is a transportation company, such as an airline or shipping company, that, being locally registered in a given country, enjoys preferential rights or privileges, accorded by the government, for international operations. It may be a state-run, state-owned or private but state-designated company or organization. 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 a certificated airline rather than a holding company, conglomerate, or multinational private equity firm) may also be known as a national airline or a national carrier, although this can have different legal meanings in some countries.

Contents

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 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 for nationalist reasons, or to aid the country's economy, particularly in the area of tourism.[citation needed]

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 United States, for example, funding for international travel by government employees is restricted to "US flag air carriers" under the Fly America Act,[2] however, this coincidental terminology should not be confused with traditional flag carriers.[citation needed]

In the last decade, 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. This has rendered the designation of "flag carriers" less important than it was in the past.[citation needed]

The term is also used loosely to refer to any dominant or major airline sized carrier in a country, or in reference to a mainline carrier with a history of a state sponsored legacy of airline service, even long after their privatization.[citation needed]

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.

Country or Region Airline Details of current state-ownership Details of former state-ownership Notes
 Afghanistan Ariana Afghan Airlines Majority[3]
 Algeria Air Algérie Majority (95%)[4] The company will be privatized between 2012 and 2013.
 Argentina Aerolineas Argentinas Majority (99.4%) [5]
 Australia Qantas None State-owned until 1992 [6]
 Azerbaijan Azerbaijan Airlines[citation needed]
 Bangladesh Biman Bangladesh Airlines Public limited company State-owned until 23 July 2007
 Bulgaria Bulgaria Air Public limited company State-owned Majority (59.58%)
 Bosnia and Herzegovina B&H Airlines[7] Majority (50.93%) 99.93% prior to 2008 Sold 49% to Turkish Airlines in 2008
 Cambodia Cambodia Angkor Air Majority (51%)[8]
 Canada Air Canada None State-owned until 1989[9]
 China Air China None State-owned until 2004[10]
 Colombia Avianca None
 Costa Rica Lacsa State-owned Owned by Taca
 Denmark Scandinavian Airlines[citation needed] Joint-Venture[11]
 Estonia Estonian Air Estonian government owns 90% and SAS Group 10% [12]
 Finland Finnair Finnair's major shareholder is the Finnish government with a 55.8 per cent holding [13]
 France Air France Minority (~20%)[citation needed]
 Germany Lufthansa None German Government sold remaining 35,68% in 1997 [14]
 Greece TAE Greek National Airlines[15] None State-owned between 1951 and 1957 Purchased by Aristotle Onassis and renamed Olympic Airways
Olympic Airways/Olympic Airlines[15] None State-owned between 1975 and 2009 Purchased by Marfin Investment Group and renamed Olympic Air
 Hong Kong Cathay Pacific Cross Holding with Air China 17.5%[16] Air China increased its holding another 12.4% to 29.9% [17] Endorsed by Brand Hong Kong (trademark owned by Hong Kong SAR),[18] trademark is visible on all Cathay Pacific Airplane [19]
Dragonair Holding by Cathay Pacific in 100% Endorsed by Brand Hong Kong (trademark owned by Hong Kong SAR),[18] trademark is visible on all Dragonair airplane same as Cathay Pacific
 Hungary Malév Majority (95%) [20]
 India Air India State owned [21][not in citation given]
 Indonesia Garuda Indonesia Majority
 Ireland Aer Lingus Irish Goverment 25.4%[citation needed]
 Iran Iran Air 100% state-owned [22]
 Israel El Al Holds no controlling stake, though Government of Israel does hold some share State-owned until June 2004 June 2004

The airline ceases to be a government company – After the purchase of stocks and exercise of options by the public, the State's holdings in the company declined to less than 50% and the airline ceases to be a government company, becoming a mixed company (as defined in the Law of Government Companies). [23]

 Italy Alitalia Compagnia Aerea Italiana State-owned until 2008[citation needed]
 Japan Japan Airlines None State-owned until 1987
 Kenya Kenya Airways Minority (23%)[24]
 Kuwait Kuwait Airways[25] Majority (65%); 35% to be privatised[25]
 Lebanon Middle East Airlines
 Malaysia Malaysia Airlines[26]
 Mexico Aeroméxico None State-owned until 2007
 Malta Air Malta Majority [27]
 Mongolia MIAT Mongolian Airlines 100% [28]
 Netherlands KLM Merged with Air France[29]
 New Zealand Air New Zealand Majority [30]
 North Korea Air Koryo State-owned[31]
 Norway Scandinavian Airlines[citation needed] Joint-Venture[11]
 Poland LOT Polish Airlines Majority (67.97%)[32]
 Latvia Air Baltic Majority (51%)[33]
 Philippines Philippine Airlines[34]
 Pakistan Pakistan International[35]
 Portugal TAP Portugal Full [36]
 Romania TAROM Majority (95%) [37]
 Russia Aeroflot Majority (51%) de facto flag carrier[citation needed]
 Singapore Singapore Airlines 54.5% through Temasek Holdings [38]
 South Korea Korean Air[39] None[40]
 Spain Iberia Minority (5%)[41]
 Sweden Scandinavian Airlines[citation needed] Joint-Venture[11]
 Taiwan China Airlines Sold shares to public in 1993[42]
 Thailand Thai Airways International Majority (51%) Sold shares to public starting in 1991[43]
 Trinidad and Tobago Caribbean Airlines Majority (84%) 16 percent owned by the Government of Jamaica[44]
 Tunisia Tunisair
 United Arab Emirates Etihad Airways[citation needed] State-owned
Emirates[citation needed] State-owned
Air Arabia[citation needed] Minority (45%)
 United Kingdom British Airways None Privatised in 1987 [45]
 Uruguay PLUNA[46]
 Vatican City Alitalia Typically the Pope flies on a chartered Alitalia Jet. The Pope's flight actual callsign is "Volo Papale" (papal flight, in Italian) followed by a serial number. [47]
 Venezuela Conviasa[citation needed] State-owned
 Vietnam Vietnam Airlines[48]
 Zimbabwe Air Zimbabwe[49] Full[50]

References

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  2. ^ Guidelines for International Travel Paid for by the Government. Wright State University.
  3. ^ https://www.flyariana.com/subpage.php?id=12
  4. ^ http://www.airalgerie.dz
  5. ^ Plummer, Robert (2008-07-22). "Argentine airline set for bumpy ride". BBC News. http://news.bbc.co.uk/2/hi/business/7519069.stm. 
  6. ^ http://www.qantas.com.au/travel/airlines/history-1990/global/en
  7. ^ Flight International 27 March 2007
  8. ^ "Cambodia launches national carrier with Vietnam's help". 2009-07-28. http://www.mb.com.ph/articles/213179/cambodia-launches-national-carrier-with-vietnams-help. 
  9. ^ CBC News. http://www.cbc.ca/news/background/aircanada/timeline.html. 
  10. ^ Air China Transfers Ownership from State-owned to Shareholding. Beijing:Sino-Cast, October 7, 2004, reprinted in Highbeam Business. Retrieved on 2011-07-01.
  11. ^ a b c SAS is partly owned by the governments of Denmark, Norway and Sweden, and is the flag carrier for all three nations.
  12. ^ http://www.estonian-air.ee/estonian_air_profile
  13. ^ http://www.finnairgroup.com/group/group_1.html
  14. ^ http://www.nytimes.com/1997/01/15/business/german-cabinet-backs-selling-lufthansa.html
  15. ^ a b "Ελληνικές Αεροπορικές Εταιρίες [Greek Airline Companies]". http://library.techlink.gr/ptisi/article-main.asp?mag=2&issue=165&article=4194. Retrieved 14 August 2011. 
  16. ^ http://www.china.org.cn/english/business/242824.htm
  17. ^ http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKmSAFQx7enw
  18. ^ a b "Brand Guideline". Brand Hong Kong. 2010. http://www.brandhk.gov.hk/en/#/en/about/guidelines.html. Retrieved 2011-07-22. 
  19. ^ http://www.airliners.net/photo/Cathay-Pacific-Airways/Boeing-747-467/0807280/M/
  20. ^ Flightglobal: Troubled Malév is renationalised 27 Feb 10
  21. ^ http://www.airindia.in
  22. ^ http://www.bloomberg.com/news/2010-07-29/iran-air-plans-share-sale-to-finance-growth-fleet-upgrade-amid-sanctions.html Accessed on 14th September 2011
  23. ^ http://www.elal.co.il/ELAL/English/AboutElAl/History.htm
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  25. ^ a b Cathy Buyck (2 August 2011). "Kuwait Airways privatization launched; 35% stake up for sale". Air Transport World. http://atwonline.com/airline-finance-data/news/kuwait-airways-privatization-launched-35-stake-sale-0801. Retrieved 10 August 2011. "The Kuwaiti government launched the privatization of struggling flag carrier Kuwait Airways, putting up for sale 35% of the carrier's KWD220 million ($806.8 million) share capital." 
  26. ^ "Malaysia Airlines posts loss, AirAsia profit down". USA Today. 2011-08-24. http://travel.usatoday.com/flights/story/2011-08-24/Malaysia-Airlines-posts-loss-AirAsia-profit-down/50118112/1. 
  27. ^ http://www.airmalta.com
  28. ^ http://www.miat.com
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  30. ^ http://www.beehive.govt.nz/release/government-pursue-mixed-ownership-model
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  37. ^ "Mission and people". tarom.ro. http://www.tarom.ro/en/tarom-company/goals/. Retrieved 2011-10-28. 
  38. ^ "UPDATE 2-Singapore Air Q1 net profit beats f'cast". Reuters. 26 July 2010. http://www.reuters.com/article/idUSSGE66P0EH20100726. Retrieved 6 August 2010. 
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  40. ^ http://www.skyteam.com/About-us/Our-members/Korean-Air/
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  42. ^ "CAL at a Glance". http://www.china-airlines.com/en/about/about-1-1.htm. 
  43. ^ "THAI Company Information: History". http://www.thaiairways.com/about-thai/company-profile/en/history.htm. 
  44. ^ "Caribbean Airlines: News/PR". http://www.caribbean-airlines.com/index.php/contact-us/newspr/2010. 
  45. ^ Harrison, Michael (1992-10-24). "Dan-Air swallowed up by BA: Rivals say competition and choice will be cut by takeover that will axe 1,900 jobs". The Independent (London). http://www.independent.co.uk/news/danair-swallowed-up-by-ba-rivals-say-competition-and-choice-will-be-cut-by-takeover-that-will-axe-1900-jobs-1559258.html. 
  46. ^ "European airline buys 4 Bombardier Q400 planes". Reuters. 2011-08-16. http://ca.reuters.com/article/businessNews/idCATRE77F5E020110816. 
  47. ^ Willey, David (2008-04-15). "Pope's US tour: Reporter's diary". BBC News. http://news.bbc.co.uk/2/hi/americas/7349513.stm. 
  48. ^ "Vietnam Airlines becomes limited liability company". 2010-06-25. http://english.thesaigontimes.vn/Home/business/other/11036/. 
  49. ^ "Trade body suspends Air Zimbabwe". BBC News. 4 February 2004. http://news.bbc.co.uk/2/hi/africa/3459139.stm. Retrieved 8 November 2011. "The company is the national carrier of Zimbabwe..." 
  50. ^ "AFRAA current members – Air Zimbabwe". AFRAA. 26 April 2011. http://www.afraa.org/index.php/membership/current-members/item/61. Retrieved 8 November 2011. 

External links


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