Flag carrier

A flag carrier is a transportation company, such as an airline or shipping company, that, being locally registered in a given state, enjoys preferential rights or privileges accorded by the government for international operations. The term also refers to any carrier that is or was owned by a government, even long after their privatization when preferential rights or privileges continue.

Flag carriers may be known as such due to maritime law requiring all aircraft or ships to display the state flag of the country of their registry.

A flag carrier (if it is a certificated airline rather than a holding company, conglomerate, or multinational private equity firm) may also be known as a national airline or a national carrier, although this can have different legal meanings in some countries.

The first definition is rooted in the fact that pursuant to Article 17 of the Convention on International Civil Aviation aircraft have the nationality of the state in which they are registered. U.S. law (14 CFR § 121.153 (a) (1)) requires American air carriers to operate aircraft registered in the United States and most countries have similar laws. Thus when an airline operates an international route, between two countries, having been designated pursuant to a Bilateral Air Transport Agreement any crime that would be committed on board would be prosecuted under the laws of the airline's state. Article 3 (1) of Tokyo Convention declares that "The State of registration [of the aircraft] is competent to exercise jurisdiction over “offenses and acts committed on board.”" Therefore the aircraft is truly carrying the flag of its country. The American definition of "U.S.-flag air carrier service" contained in 48 CFR 47.403-1. is based on this first definition. The U.S. requirements under the Fly America Act, are consistent with requiring that Title 18 of the United States Code (U.S. Criminal Law) would protect U.S. government employees on flights to foreign countries.

...
Wikipedia