A Law Protecting Airlines Is Strangling Small U.S. Pacific Islands. Mike Lee Wants To End It

Key Takeaways

• Cabotage law blocks foreign airlines from intra‑territory flights in Guam and Samoa
• Lifting restrictions could boost GDP of the three territories by 2‑3% annually
• United and Alaska Airlines enjoy monopoly protection on limited Pacific island routes
• Pacific Island Flight Alternatives Act and H.R. 1536 seek to liberalize air service
• Residents face high fares and infrequent flights due to lack of competition

Pulse Analysis

The cabotage provision that bars foreign airlines from operating purely domestic routes in U.S. Pacific territories dates back to post‑World War II protectionism. While it was designed to safeguard American carriers on the mainland, the rule treats Guam, the Northern Mariana Islands and American Samoa as if they were contiguous domestic markets, ignoring their geographic reality. These islands sit closer to Asian airline hubs than to Hawaii or the continental United States, making foreign carriers the most logical service providers. By preventing them from offering intra‑territory flights, the law forces residents to rely on a single U.S. airline or endure limited, expensive connections.

Economic analyses suggest that liberalizing air service could raise the combined GDP of the three territories—about $9 billion today—by 2‑3% annually. More frequent flights and lower fares would lower the cost of imported goods, boost tourism, and expand access to health care and education. The current monopoly benefits United in Guam and Alaska Airlines in American Samoa, but it imposes a hidden wealth transfer from island residents to airline profits and labor contracts. The dispersed voting power of the islands’ populations contrasts sharply with the concentrated gains enjoyed by incumbent carriers and their unions, creating a classic case of regulatory capture.

Legislative attempts to fix the imbalance have surfaced repeatedly. The 2024 Pacific Island Flight Alternatives Act and its 2025 successor, H.R. 1536, would permit select Asian airlines to operate short‑haul routes between the islands and to the U.S. mainland, effectively ending the “Jones Act of the Skies.” Proponents argue that these changes align with broader U.S. aviation policy goals, such as the Fly America Act, while opponents fear a precedent that could erode protections for domestic carriers. If passed, the reforms would not only improve quality of life for island residents but also set a precedent for revisiting other outdated transportation restrictions across U.S. territories.