The overall purpose of Cabotage rules are to prohibit foreign aircraft from one country traveling into another country and picking up foreign nationals or citizens of the other foreign country and providing transportation to and between points within that foreign country.
Cabotage is defined as a non-remunerated not-for-hire flight between two points within a foreign country, carrying residents whose travel begins and ends in that country. Cabotage in the traditional sense; i.e., for hire, is almost universally prohibited.
The Standard Dictionary of the English language defines Cabotage (for flight purposes) as "air transport of passengers and goods within the same national territory." The definition adopted by International Civil Aviation Organization [ICAO] at the Chicago Convention is, "Each state shall have the right to refuse permission to the aircraft of other contracting states to take on its territory passengers, mail, and cargo destined for another point within its territory.”
Private pilots and commercial operators should understand "Cabotage," formally defined as "air transport of passengers and goods within the same national territory." The definition adopted by ICAO at the Chicago Convention is, "Each state shall have the right to refuse permission to the aircraft of other contracting states to take on its territory passengers, mail, and cargo destined for another point within its territory." Although Cabotage rules are different in various countries and usually incorporate the term "for hire," some countries do not allow even non-revenue passengers to be carried by a foreign aircraft within their boundaries. The restrictions range from no restrictions as in Italy, to not allowed, as in Pakistan. The fines for Cabotage can be extremely high; therefore, pilots and flight departments should be absolutely sure of a country's Cabotage rules before carrying passengers. The Cabotage requirements and restrictions of individual countries are listed in the corporate aircraft restraints section for each country in the IFIM. Refer to Chapter II, Article 7 of the Chicago Convention.
In the United States any required exemption for approval of any foreign carrier or aircraft, (private, corporate or other), such approval is issued by the U.S. Department of Transportation under 49 U.S.C. 49109(g).
As defined by the Department of Transportation (DOT) Office of Legal Counsel, a senior attorney states Airline Cabotage is the carriage of air traffic that originates and terminates within the boundaries of a given country by an air carrier of another country. Rights to such traffic are usually entirely denied or severely restricted. Under 49 U.S.C. section 40109(g), the DOT may authorize a foreign air carrier to carry commercial traffic between U.S. points (i.e., cabotage traffic) under limited circumstances. Specifically, the DOT must find that the authority is required in the public interest; that because of an emergency created by unusual circumstances not arising in the normal course of business the traffic cannot be accommodated by U.S. carriers holding certificates under 49 U.S.C. section 41102; that all possible efforts have been made to place the traffic on U.S. carriers; and that the transportation is necessary to avoid undue hardship to the traffic involved (an additional required finding, concerning emergency transportation during labor disputes, is not relevant here). For further information on interpretation of this requirement, contact the Office of International Law, Office of General Counsel, 202-366-2972, firstname.lastname@example.org, 400 7th Street SW, Washington, DC 20590.
The Customs authorities of foreign countries, including Customs & Border Protection in the U.S. will not permit Cabotage and under the Customs Regulations have their own enforcement rules on Cabotage and in most actions as in Europe (EU) and Canada, aircraft can be seized if it is determined Cabotage violations have occurred. An example in Canada Customs rules is “under no circumstances may a foreign non-tax-paid aircraft enter Canada for the sole purpose of carrying passengers or goods point-to-point in Canada”.
Cabotage rules in all foreign countries are not all or only aviation related, but are revenue in general and various other Government Agencies regulations apply. Commercial transportation is not limited to airlines or charter companies charging for transportation services. But can include flights of any kind on any aircraft which transport persons, cargo or virtually anything for the commercial good of an industry or business.