Air Cargo Foreign Ownership Restrictions in the United States

By Christopher Furlan, University of Miami School of Law

Federal statutes require air carriers, including cargo carriers, seeking operating certifications to be “owned or controlled” by citizens of the U.S. This requirement is enforced by Department of Transportation (DOT) fitness reviews on applicant airlines to ensure they meet the “citizenship” definition as defined in 49 U.S.C. §41102. The purpose of this paper is to address the current state of foreign ownership and control restrictions in the U.S. air cargo industry including; significant legislation and administrative case law, the benefits of removing these restrictions, and the direction the regulatory environment.

The first section of the paper discusses significant legislative acts affecting ownership and control. The legislation discussed includes the Air Commerce Act of 1926, the Civil Aeronautics Act of 1938, the Federal Aviation Act of 1958, and the law as it reads currently in amended form. The second section analyzes U.S. administrative agency interpretation of these laws. This section analyzes how the DOT interprets the law through major cases including, most recently, The Matter of Citizenship of DHL Airways. The third section analyzes current political initiatives shaping ownership and control including recent efforts to liberalize this area of law. The fourth section discusses expected benefits expected to accrue to the industry should ownership restrictions be eliminated. Finishing off the paper is a brief discussion of recommendations for continuing with the liberalization process. I hope this paper provides the reader with insight into a segment of the certification process, in addition to a greater understanding for the need to change the legal regime that places outdated restrictions on it.

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