Cebu Pacific, PAL question draft implementing rules of EO 29

Manila, Philippines - The country’s two biggest air carriers questioned yesterday the draft implementing rules of Executive Order 29 adopting a pocket open skies policy in the Philippines for being vague and unrealistic.

Cebu Pacific (CEB), in particular, scored a provision that will set aside the requirement to grant reciprocal traffic rights to local carriers when national interest calls for it.

Philippine Airlines (PAL), for its part, criticized the non-inclusion of representatives from local carriers in the Philippine Air Panel that will negotiate air service agreements. The carriers shall as observers, prior to any negotiation submit their position/requirements relative to the bilateral partner.

PAL president Jaime Bautista in an interview with The STAR said he questioned Rule 2.7 which “reserves to the Air Panel the right to amend, alter, or revise any position taken, prior to the bilateral talks, if it deems to be more in keeping with national interest.”

President Aquino last month issued twin executive orders that will implement open skies in the Philippines, eventually allowing foreign airlines to serve selected local routes. EO 28 creates the Philippine Air Negotiating Panel (PANP) and the Philippine Air Consultation Panel (PACP), while EO 29 authorizes the Civil Aeronautics Board (CAB) and the two panels to explore discussions with foreign carriers regarding the aviation liberalization policy commonly known as “open skies.”

Bautista stressed that he does not see the point of all these considering that there are many available entitlements, but not takers.

Meanwhile, CEB president Lance Gokongwei told The STAR that the provisions of Rule IV under the draft IRR EO 29 (transformation of operating rights into traffic rights) tend to contradict each other.

Rule 4.1 of the draft IRR provides that the Philippine Air Panels and the Civil Aeronautics Board (CAB) shall hold talks with the respective states of registry of the carriers operating under EO 29 for the conversion of operating rights into traffic rights. This, the rule said, shall include the inclusion of reciprocal grant to Philippine carriers of equivalent traffic rights by the said states.

Rule 4.2, meanwhile, provides that the CAB, in case of failure to reach mutual agreement to grant reciprocal rights to Philippine carriers within 12 months from the grant mentioned in the preceding rules, may revoke the conversion of operating rights into traffic rights.

Gokongwei said government has to explain why it had to include in the draft IRR Rules 4.3 and 4.4 which contradict the reciprocity rule provided in Rules 4.1 and 4.2

According to Rule 4.3, notwithstanding the non-inclusion of traffic rights mentioned in Rule 4.1 in the relevant air service agreement (ASA), the CAB may continue to allow operation of traffic rights under EO 29 if it deems it to promote national interest and/or mutual benefits.

Rule 4.4, on the other hand, says the CAB reserves the right to revoke, suspend, or restrict operations granted in the event the state of registry of the foreign carrier operating under this grant failed to extend reciprocal rights and/or equal opportunity to Philippine carriers.

CEB has been asking government to include in the IRR of EO 28 and 29 provisions that will ensure that reciprocal traffic rights are granted to domestic carriers.

The ASA, or bilaterals, governs the civil aviation relationship between states that are parties to it. Traffic rights, meanwhile, is a market access right which specifies who or what may be transported over an authorized route or parts thereof in the aircraft.

A foreign air carrier’s permit (FACP) is a permit issued by the CAB and approved by the President which authorizes a foreign carrier to engage in foreign air transportation. A temporary operating permit (TOP), on the one hand, is the authorization issued by the CAB for a fixed term for the operation of scheduled or non-scheduled services by an air carrier pending the issuance of a FACP.

An FACP or TOP is a condition before any foreign carrier is granted operating rights under EO 29.

EO 29 seeks to further liberalize civil aviation in the Philippines, specifically to airports other that the Ninoy Aquino International Airport (NAIA) and “to promote a more liberalized policy for the expansion of direct air services, both passenger and cargo to secondary gateways outside of Metro Manila in order to advance domestic tourism…”

It provides that the Philippine Air Panel may offer third, fourth or fifth freedom traffic rights without restrictions on frequency, capacity and type of aircraft and other arrangements in the consideration of national interest as may be determined by the CAB.

The third freedom gives the right to fly from one’s own country to another while the fourth freedom covers the right to fly from another country to one’s own. The fifth freedom is the right to carry passengers from one’s own country to a second country, and from that country to a third country.

However, the same EO prohibits CAB from granting any foreign air carriers cabotage traffic rights of any kind, such as the right to transport passengers and goods between two or more points within the Philippines.

In both EO 29 and 28, designated national carriers have been relegated to mere observers instead of members of the Philippine Air Panel. The draft EO 29 IRR said that prior to any negotiation with other states by the Panel, the carriers shall submit their respective requirements and/or positions relative to the bilateral partner.

Gokongwei said that they have no problem with being mere observers since this is a practice also being observed by other countries.