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Flags of convenience now haunt air cargo shippers

The growing number of parallels in today’s civil aviation to traditional maritime ‘flagging out’ scenarios is striking.
By Patrick Burnson, Executive Editor
March 25, 2013

The International Transport Workers’ Federation (ITF) has issued a warning about the growth of ‘“flags of convenience” in aviation to the sixth International Civil Aviation Organization (ICAO) Air Transport Conference in Montreal, Canada.

In a submission paper from ITF civil aviation section secretary Gabriel Mocho entitled “Would maritime style flags of convenience contribute to sustainable aviation?” he urged a strategy to address the negative consequences of continued liberalization.

His presentation paper in part states: “There is growing evidence that airlines … are increasingly re-structuring their operations to reflect classic maritime ‘flags of convenience’ scenarios. In the maritime sector, ships and fleets can be ‘flagged out’ to countries (including land-locked nations with no maritime tradition, such as Mongolia) that offer tax avoidance, lower-cost safety and labor standards and conditions, and inadequate safety supervisory and inspection structures. “Flagging out” is generally driven by the desire to save costs (including paying lower taxes) or to escape effective regulatory control by the State in which the vessel or fleet is beneficially owned. It is the ultimate privatization of regulation. If a ship-owner does not like what the regulator is doing, it quits the flag and find a more convenient or compliant one.

The growing number of parallels in today’s civil aviation to traditional maritime ‘flagging out’ scenarios is striking. Offshore registries for civil aviation aircraft exist and are growing in Aruba, Bermuda, Ireland, Malta, Georgia and Lithuania. Offshore registries for private aircraft also exist in the Cayman Islands, the Isle of Man, and San Marino.

More on this tomorrow.

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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