Engineer
Actually Websters defines cabotage as:
n- from the French caboter- [to sail along the coast](1831) - 1 : trade or transport in coastal waters or airspace between two points within a country. 2 : the right to engage in cabotage.
One of my reference books defines it like this: The carraige of air traffic which originates and terminates within the boundraries of a given country by an air carrier of another country. Rights to such traffic are usually entirely denied or severely restricted.
Most other texts that I have define it the same way. An example would be if Caledonian Wings (an non-U.S. company) wanted to carry cargo between JFK and LAX. This is the generally accepted definition of cabotage and the one that the Chicago Conference adopted. Not sure where your def. came from but most in aviation don't dfine it that way. (unless I read it wrong or you typed it wrong....)
What follows is shamelessly plagerized from the folks at Perdue University Aviation Technology Class Notes (AT300 Aviation Infrastructure):
Bilateral Agreements and the Seven Freedoms of International Air Service.
The First Chicago Convention – Chicago 1944
In the shadow of World War II, free nations gathered in Chicago to lay a foundation for international air transportation. A number of nations, including the United States, argued for a multinational free-market environment. Others, and notably the British, argued for a more restrictive environment and their views prevailed. Today, international air transportation is among the most restricted forms of international commerce. Service is provided under bilateral agreements negotiated between the two nations served. Unlike the multilateral agreements of the World Trade Organization (WTO), international aviation services are banned unless authorized by these bilateral agreements.
While the Chicago convention failed to produce a free aviation market, it did create the safety and other regulatory infrastructure, which has enabled air transportation to transform the world’s economy in the jet age, bringing diverse peoples together, generating knowledge and understanding, inhibiting prejudice, catalyzing cultures, and stimulating commerce.
Bilateral Agreements
The bilateral air service agreements negotiated between nations traditionally seek
a reciprocal balance of benefits for the airlines of both countries. As the United States had the largest domestic air travel market, and therefore more major airlines than other countries, it became increasingly difficult from the 1970’s onwards, for other countries to find benefits for U.S. carriers that balanced the benefit they sought for their own carriers in a new bilateral. The user – the air traveler and the shipper – and the economic needs of cities were not considered a serious factor until the formation of USA-BIAS became a balancing force in U.S. international aviation policy.
Bermuda 1
The first aviation bilateral agreement was negotiated between the United States
and Great Britain and is known as "Bermuda 1". Negotiators from both sides were flown to the Island of Bermuda by the U.S. Army Air Corps and left there until they had hammered out an agreement. Bermuda 1 became the template for many other bilateral agreements negotiated through to the early 1970’s.
Bermuda 2
In 1978 the United States and Great Britain negotiated a significantly different bilateral agreement, which expanded market access for the consumer but which still tightly regulated capacity, pricing, and other marketing factors. This agreement became known as Bermuda 2. Subsequently, a growing number of bilateral air agreements of a liberal nature were negotiated with other countries.
If you will read my post above I think it will answer your questions or at least confim your impressions of the Chicago Conference.
This is all way to complicated to go into on this thread as we are already far off topic. (sorry Danny). I just felt it necessary to educate those who find a little crumb of knowledge (Gov) and proceed to crow from the rooftops.