With the recent United Airlines fiasco, I was reading up on their history and the airline industry and to my surprise I found that United Airlines is not the US flag carrier. In fact, the US does not have flag carrying airline at all! All this time I thought UA was the national carrier for the US. This brings me to the question, why? Why doesn't the US have a national carrier? Is this because of some FAA regulation?
The definition of a "Flag Carrier", although somewhat vague and frequently disputed, is generally accepted to mean: an air carrier that is owned by, or subsidized by, the government of the country of registration, especially for the purposes of flying international routes.
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.
Airline ... registered under the laws of a country whose government gives it partial or total monopoly over international routes.
The US has no carriers in this category. All subsidizing of major domestic and international routes ended with the Airline Deregulation Act of 1978. (Note: there are still some small airlines and routes that are subsidized to serve very small communities... If you want to read more about this program, it's called Essential Air Service.)
There are many meanings of "flag carrier", one of which is not addressed in the other answers.
In regulated international air travel markets, each pair of countries would agree (via treaty) to let each others' "flag" carriers fly between them. For instance, Britain would allow Air France (France's flag carrier) to fly to London in return for France allowing British Airways (Britain's flag carrier) to fly to Paris. Where a country owned and/or subsidized one particular airline, that was the obvious choice as the flag carrier, but that is the only connection.
The US, for various reasons, was allowed to name two flag carriers: Pan-Am and TWA. Later deregulation of the most profitable markets left them vulnerable to destructive competition, and they eventually folded. United inherited Pan-Am's flag status, and American inherited TWA's flag status. That doesn't matter in the many deregulated markets, of course, but it still matters for the many markets that are still regulated. Non-flag carriers, such as Delta, can only access regulated markets via a codeshare agreement with the other country's flag carrier.
We were recently told these were the Flag Carriers of the US, under the Fly America First:
Federal travelers are required by 49 U.S.C. 40118, commonly referred to as the "Fly America Act," to use U.S. air carrier service for all air travel and cargo transportation services funded by the U.S. government.
My company gave us this list:
U.S. flag air carriers: • Airtran Airways (FL) • Alaska Airlines (AS) • American Airlines (AA) • Continental Airlines (CO) • Delta Airlines (DL) • Frontier Airlines (F9) • Hawaiian Airlines (HA) • JetBlue Airways (B6) • Midwest Express (YX) • Southwest Airlines (WN) • Spirit Airlines (NK) • United Airlines (UA) • USAirways (US)
With plenty of exceptions relating to international travel.
U.S. Flag Air Carrier. The term "U.S. flag air carrier" means an air carrier holding a certificate under section 401 of the Federal Aviation Act of 1958 (49 U.S.C. App. 1371). Foreign air carriers operating under permits are excluded.