Ground the Fly America Act

Companies that do business with the federal government are required to comply with a variety of special laws. Many of those laws, though esoteric, make perfect sense when studied closely, but others do not.

Unfortunately, some of the laws carry substantial costs that get passed back to the government and eventually to U.S. taxpayers. One of the most unreasonable and expensive is the Fly America Act.

Fly America became law in 1975. As described by Congress, its purpose was to improve the economic and competitive position of U.S.-flagged air carriers against foreign carriers that were suspected of benefiting from government subsidies. The law requires federal employees and others using government-financed air travel to fly on domestic aircraft unless such aircraft are "unavailable."

"Availability" in this context goes well beyond what most people consider reasonable. As defined in regulations, a U.S.-flagged aircraft generally will be considered available to a traveler if using it, instead of a foreign-owned aircraft, does not increase the number of aircraft changes that must be made by more than two, does not extend total travel time by more than six hours and does not require a layover of more than four hours.

Beyond the awkwardness of complying with the regulations, there is a more important reason to repeal this law. When Fly America took effect, it was fairly easy to separate domestic airlines from foreign ones. The distinction made advocating this blatantly protectionist law easier. But much has changed since then.

For example, the practice of "code sharing" has become commonplace. Under a code-sharing arrangement, a U.S.- certificated carrier effectively leases space on the aircraft of a foreign carrier and issues tickets to passengers as though the aircraft is its own. Such travel complies with Fly America, as long as the U.S. carrier issues the ticket.

In 1999, the Transportation Department adopted guidelines to ensure compliance with U.S. safety standards by foreign airlines participating in code sharing. The guidelines streamline the approval of code-sharing agreements, leading to their further proliferation.

More important, the rules on foreign ownership of U.S. airlines have changed substantially. In 1975, foreign entities could hold only the smallest interest in an airline. Today, ownership may reach 49 percent of a U.S. airline's nonvoting stock, and 25 percent of its voting stock. That makes it harder to define which airlines are ours and which are theirs.

Many commentators are advocating an even more open approach to foreign participation in U.S. air travel, as an accommodation to the traveling public. At the extreme, one Washington-based think tank says foreign-owned air carriers should be given equal footing with U.S. carriers for all purposes.

Whatever the supposed merits of the Fly America Act were in 1975, it is hard to find any today. The act costs U.S. businesses, and ultimately U.S. taxpayers, untold millions of dollars each year. It is time to get rid of it.

Peckinpaugh is corporate counsel for DynCorp, Reston, Va.


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