Enforcement Action Against a Foreign-Registered Charter
A foreign-registered business jet operates a series of charter flights between two domestic points in State G, picking up and dropping off passengers who are employees of a State G company. The flights are arranged by a broker in State G, and the aircraft is registered in State H. The operator holds a State H air operator certificate and an operating licence that permits international charter only. State G's regulations reserve cabotage to national carriers and require a foreign operator to hold a permit for each flight. The operator has been operating for six weeks without permits, relying on an informal assurance from the broker that the flights are 'private' because the passengers are all from one company. State G's authority has now issued a notice of enforcement action, proposing a fine and a direction to cease operations. The operator argues that the flights are not cabotage because the passengers are not members of the public and the aircraft is not a scheduled service.
1. Is the operator's cabotage argument correct under the Chicago Convention? Explain the relevant articles and the nature of cabotage.
Read the worked answer
The argument is wrong.
Article 7 of the Chicago Convention reserves cabotage - the carriage of traffic between two points within the territory of a State - to that State's national carriers, and permits each State to refuse permission to other States' carriers to take on or discharge traffic for hire or reward between points within its territory. The prohibition is not limited to scheduled services or to members of the public. The test is whether the flight carries traffic between two domestic points for hire or reward. The passengers are employees of a State G company, the flights are arranged by a broker, and the operator is a commercial charter operator. That is carriage for hire or reward between domestic points, which is cabotage.
The fact that the passengers are all from one company does not convert the flights into private carriage. Private carriage in the Convention sense refers to flights not for hire or reward, typically the operator's own business transport. Here the broker is arranging the flights and the operator is being paid, so the carriage is commercial.
The 'not a scheduled service' point is irrelevant to cabotage. Article 7 applies to both scheduled and non-scheduled flights. Article 5's non-scheduled overflight and landing rights do not extend to cabotage, and Article 5 itself preserves the State's right to regulate.
The operator also needed a permit for each flight under State G's regulations. The broker's informal assurance is not a permit and does not bind State G.
2. What should State G's enforcement response be, and what remedies are available to the operator?
Read the worked answer
State G may enforce. The flights breach Article 7 and State G's cabotage regulations, and the absence of permits breaches the permit requirement. State G's authority can impose the proposed fine, direct the operator to cease the cabotage flights, and, if the conduct continues, take steps against the aircraft and the operator's ability to use State G's airports.
The enforcement must follow State G's national law: a written notice, an opportunity to respond, and a reasoned decision. State G should also consider action against the broker, who arranged the flights, and should notify State H, as the State of Registry and the State of the Operator, so that State H can consider whether the operator's AOC and operating licence were exceeded. State H's operating licence permits international charter only, so the cabotage flights are outside its scope.
The operator's remedies are limited. It can respond to the notice, argue mitigation (the broker's assurance, the absence of prior warning), and seek a reduced penalty. It cannot argue that the flights were lawful cabotage. It should cease the flights immediately, apply for permits for any future international flights, and negotiate with State G on the fine. If State G's process breached its own law, the operator could seek review in State G's courts, but the substantive breach is clear.