By Timothy M. Ravich
The Panama Canal has long been one of the most strategically significant waterways in the world, a crucial conduit for global maritime trade. Modernly, it is a recurring focus of U.S. national security policy, most recently during the Trump Administration’s efforts to reassess geopolitical vulnerabilities tied to the canal’s control and operations. As tensions with China have escalated, concerns have arisen about Chinese state-linked firms’ involvement in canal operations, reigniting discussions on whether the U.S. could or should retake control of the canal under existing legal frameworks.
Less discussed, however, is the canal’s connection to aviation—both commercial and military—and the evolving legal framework that has governed its ownership and airspace operations. From the earliest days of powered flight to the rise of Panama as a commercial air hub, the canal and aviation have been inextricably linked in ways that reflect shifting geopolitical, economic and legal dynamics.
Image of a Canal Zone airmail stamp first issued in 1946 courtesy of iStock.
Early Aviation and the Defense of the Canal
The first recorded flight in Panama took place in 1912, just two years before the completion of the canal. From the outset, aviation played a critical role in the canal’s security. Recognizing the vulnerability of the waterway to aerial attacks or sabotage, the U.S. military rapidly incorporated aviation into its canal defense strategy. In 1917, the first military flight over the canal was conducted, marking the beginning of air patrols designed to safeguard one of the Western Hemisphere’s most vital strategic assets. The Grey Knights, America’s oldest maritime patrol squadron, was established on July 1, 1931, at Naval Air Station Coco Solo near the Panama Canal.
Photo of Naval Aviation Base courtesy of the National Archives and Records Administration - NARA.
World War II led to an expanded military presence in the region. The United States constructed key airbases, including Albrook Field (later Albrook Air Force Station), where the United States Air Force’s Southern Command—initially designated as the Panama Canal Air Force—was established in 1940 (until being inactivated in 1976), to monitor and defend the canal. This and other bases remained critical through the Cold War, reinforcing the canal’s role as a linchpin in hemispheric defense.
The Legal Landscape
For much of the 20th century, the legal framework governing aviation in the Panama Canal Zone was shaped by U.S. sovereignty over the territory. Under the 1903 Hay–Bunau-Varilla Treaty, the U.S. controlled not just the canal itself but also surrounding land and infrastructure, including airfields and airspace. This legal arrangement persisted until the 1977 Torrijos-Carter Treaties, which set in motion the gradual transfer of the canal—and its associated aviation assets—back to Panama, a process completed in 1999.
Image courtesy of the National Archives and Records Administration - NARA.
This transition had significant implications for international aviation law. Panama assumed control over its own airspace, aligning its regulations with global standards established by the International Civil Aviation Organization (ICAO). Overflight rights, previously influenced by U.S. military priorities, became a matter of Panamanian jurisdiction.
As Panama gained full control of its airspace, it has leveraged its geographic advantage to become a significant player in international aviation. Tocumen International Airport in Panama City is a transit hub, largely due to the expansion of Copa Airlines. Like the canal itself, moreover, Tocumen has become a critical juncture for global commerce, facilitating connections between North and South America, with more than 15 million passengers using the airport per year. Panama’s aviation laws have also evolved to support this growth, embracing open-skies agreements, for example.
Aviation Law and the Panama Canal
Other than the major international legal instruments granting and then relinquishing U.S. control of the Panama Canal, U.S. law respecting the Panama Canal is insightful, if limited.
Legislatively, for example, the Death on the High Seas Act ("DOHSA"), 46 U.S.C.A. App. §§ 761 to 767, enacted in 1920, provides a legal framework for wrongful death claims occurring beyond U.S. territorial waters. As originally enacted, Section 30308 of the DOHSA made clear that it did not apply to the Great Lakes or waters within the territorial limits of a state “or to any navigable waters in the Panama Canal Zone.” The law was later revised to omit this quoted language because the Panama Canal Zone was transferred to the Republic of Panama.
Photo courtesy of the National Archives and Records Administration - NARA.
Courts have had infrequent occasion to address issues relating to the Panama Canal and aviation. Isthmian Airways v. United States is one such case. There, the United States Court of Claims considered allegations by a trans-isthmian passenger airline that it was driven out of business by arbitrary and unreasonable requirements set by the then-Governor of the Panama Canal Zone, including that the airline retire certain of its airplanes or undertake costly overhauls. When the airline failed to comply, its operating permit was revoked in 1936, followed by the cancellation of its land licenses, forcing it to shut down. Shortly thereafter, a competing airline—despite having older aircraft—was granted permission to operate. The aggrieved airline sued the government, claiming it had been forced out of business unfairly and that its property and investments had been wrongfully taken. The court ruled that the company’s permits were always revocable, however, and that the airline had no breach of contract claim (though a tort claim was theoretically possible).
Conclusion
Whether national and international law will change given present geopolitical issues, recent attention centered on the Panama Canal presents an opportunity to highlight the perhaps underappreciated role of aviation there. In 1915, San Francisco presented a world fair to commemorate the opening of the Panama Canal by featuring exhibitions centered on the marvels of flight. One hundred years on, in the age of drones, the future of the Panama Canal is again up in the air.
Top image depicting poster for the 1915 Panama-Pacific International Exposition courtesy of the California Historical Society.
Bottom image of pilot Art Smith and his airplane on the aviation field during the 1915 Panama-Pacific International Exposition courtesy of the Library of Congress Prints and Photographs Division Washington, D.C.
About Timothy M. Ravich
Timothy (Tim) M. Ravich concentrates his practice in the areas of aviation, product and general civil litigation. Recognized as one of only 50 lawyers qualified as a Board-Certified Expert in the area of aviation law, Tim specializes in transactional and regulatory matters related to the ownership, maintenance and utilization of aircraft, airports and airspace. Read Tim's full bio here.