Therefore, we are NOT engaging in Cabotage. If we were selling tickets to the general public on flights within the UK, taking passengers from London to Glasgow and so forth, yes that would be Cabotage and it would be illegal. We do not do that.
To say that the USA is alone in prohibiting Cabotage is foolish.... It was not the USA which set up the ban on Cabotage in the first place. Cabotage was prohibited when the "Freedoms of the Air" were listed at the time of ICAO's formation in 1944.
Every country affiliated with ICAO has a responsibility to uphold the ban on Cabotage.
What you describe as a Fly America policy is probably nothing more than the USA adhearing to ICAO's prohibition against Cabotage.
Every other country should do the same.
Wait, does ICAO actually require countries to forbid cabotage, or does ICAO merely permit countries to forbid it?