What to Know about Foreign Aircraft Operating in the U.S.

Failure to comply with certain standards can be devastating for a country’s air carriers.

The nations of the world cooperate to make air travel possible across their borders. Almost all countries belong to the International Civilian Aviation Organization (ICAO), and the flight rules across nations generally align with the standards it establishes. Indeed, the ICAO Convention provides that “each contracting State agrees to adopt all practicable measures…to facilitate and expedite navigation by aircraft between the territories of contracting States.”

The FAA rates nations on compliance with ICAO standards. A country receives a Category 1 rating if FAA inspectors determine that its civil aviation authority “licenses and oversees air carriers in accordance with ICAO aviation safety standards.” Failure to comply with those standards can result in a Category 2 rating. 

The result of a country being rated Category 2 can be devastating for its air carriers and bad for U.S. partners as well. In May of 2021, following an audit, the FAA downgraded Mexico to Category 2. As a result, scheduled flights by its airlines to and from the U.S. have been limited to existing routes; new services and routes are prohibited, and the FAA conducts increased surveillance on existing flights. Further, though U.S. airlines can continue to operate in Mexico, they are prohibited from selling tickets with their names and designator codes on flights operated by their Mexican code-share partners. Additional restrictions apply to Mexican on-demand (charter) operators. In January 2023, the FAA opened an office in Mexico to assist in restoring the Category 1 rating, but as of this writing the country’s Category 2 designation remains. 

The FAA defines a “foreign civil aircraft” as “(a) an aircraft of foreign registry that is not part of the armed forces of a foreign nation, or (b) a U.S.-registered aircraft owned, controlled, or operated by persons who are not citizens of the United States.” The latter is possible because FAA regulations specifically permit aircraft that are “based and primarily used” in the U.S. to be registered to foreign nationals, and aircraft can be registered in trusts that constitute U.S. citizens (for example, where a U.S. bank is the trustee and registered owner), even if the trust’s beneficiaries are not citizens. 

Special Rules Depend on the Circumstances

Foreign civil aircraft that comply with ICAO standards are eligible to fly in U.S. airspace, but special rules apply. Not surprisingly, for operations that require two-way radio communications (and IFR operations in general), such aircraft must have someone on board and on duty who can communicate in English. IFR operations require certain equipment and pilots who are “thoroughly familiar with the United States’ en route, holding, and letdown procedures,” and additional rules apply for operations over water and at or above FL240. Specified documents, such as an airworthiness certificate, must be on board all flights. 

Many additional rules apply, depending on the circumstances: Is the flight for compensation or hire? Scheduled or on demand? Is common carriage involved? Does the aircraft land in the U.S. and why? Is it registered in or was it manufactured in a country that is a member of ICAO?

The big issues for foreign civil aircraft operations in the U.S. pertain to commercial flights. According to the FAA, foreign civil aircraft not engaged in commercial air operations “into, out of, or within” the U.S. may be flown in the country and “may carry non-revenue traffic to, from, or between points” in the U.S. 

In addition, a provision partly modeled on FAR 91.501(b), which is applicable to U.S. business jets, permits foreign civil aircraft to provide transportation in the U.S. if they are operated in furtherance of a business (other than the business of transportation by air). Such transportation must be within the scope of and incidental to the business using time-sharing, interchange, and joint ownership agreements. Additional exemptions apply for non-scheduled transit flights as long as they are nonstop or (under certain circumstances) stop at U.S. airports for less than 24 hours.

Elaborate Rules for Commercial Flights

On the other hand, more elaborate rules apply to standard airline and commercial flights. Scheduled (airline) flights in common carriage that load or unload passengers, cargo, or mail in the U.S. must obtain a foreign air carrier permit from the Department of Transportation’s Office of International Aviation (X-40) or (since it can take a while to obtain such a permit) a temporary exemption in the meantime. 

The permit isn’t required for unscheduled, non-common carriage flights even though they are landing in the U.S. to load and unload passengers, cargo, or mail, but permission must be obtained from X-40 at least 15 days prior to the flight. For some flights, a “notice of transit” must be sent to X-40 even though the flights are only passing through the U.S. and not loading and unloading.

Once you intend to charge for flights on a foreign civil aircraft, the major issue that arises is “cabotage.” The basic idea is that a country should be able to conduct and regulate (and enjoy the profits of) the business of carrying passengers and cargo on commercial flights for “remuneration or hire” within its own borders. Cabotage originated in the shipping industry (the word is derived from the French “caboter,” meaning travel along the coast). In shipping, cabotage is basically a business issue; in aviation, it is also a safety issue. Most countries accordingly have cabotage restrictions that prohibit foreign aircraft from picking up and dropping off passengers and cargo within their borders.

Note that cabotage restrictions do not prohibit foreign airline and charter aircraft from simply dropping off or picking up passengers in the U.S. If they did, parallel restrictions would likely be applied in other countries as well, in which case no one could ever pay to fly from one country to another. For example, if U.S. rules prevented a Germany-registered aircraft from picking up passengers in Frankfurt and transporting them to New York (with the idea that this privilege should be reserved for U.S. aircraft), parallel German cabotage restrictions would be expected to prohibit U.S. aircraft from transporting passengers from New York to Frankfurt. 

The rules for foreign aircraft operations in the U.S. are complex. However, FAA regulations contemplate the possibility of obtaining a “special authorization” for a specific flight or flights that would otherwise be disallowed by the regulations, assuming it is in America’s interest and that similar flights would be possible for U.S. aircraft in the applicant’s jurisdiction.