Flag carrier

[6] The term "flag carrier" is a legacy of the early days of commercial aviation when governments often took the lead by establishing state-owned airlines because of the high capital costs of running them.

The establishment of competitors in the form of other locally registered airlines may be prohibited or heavily regulated to avoid direct competition.

[14] Even where privately run airlines may be allowed to be established, the flag carriers may still be accorded priority, especially in the apportionment of aviation rights to local or international markets.

[16] The aviation industry has also been gradually deregulated and liberalized,[17] permitting greater freedoms of the air particularly in the United States and in the European Union with the signing of the Open Skies agreement.

[18] One of the features of such agreements is the right of a country to designate multiple airlines to serve international routes with the result that there is no single "flag carrier".