Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

‘H.B.No.__510

Introduced by HONORABLE JUAN EDGARDO “SONNY” M. ANGARA

EXPLANATORY NOTE

Our government places the highest priority on poverty alleviation, particularly in the
countryside. Rural development is the necessary strategy to do so and maximum private sector
participation is ideal to achieve it. The establishment of a private rural airport infrastructure will
encourage economic activity in the hinterlands, by serving not only as transportation hubs but

also as industrial, commercial and service centers which will provide countryside employment to
uplift the rural standards of living.

Speedy access between urban and rural areas may be provided only by the construction
and maintenance of a rural air transport network complemented by the rehabilitation and
maintenance of former or existing airports in the remote areas of our archipelago, Economic
development, particularly in the countryside mandates a rural airport network as an essential
part of the country's overall transport infrastructure. National airports in the main urban areas,
such as: Manila, Cebu (Mactan), Davao, Zamboanga, lloilo and Bacolod are equipped with
adequate guidance, communications, security and safety systems. However, most of the so-
called missionary routes are inadequately equipped, and all the rural routes, are those even
more remote than the missionary routes, HAVE NO SUPPORT WHATSOEVER. These rural
routes are the most difficult to access not only due to their remoteness, but also due to no
government presence at all

Many of them are scattered throughout the many islands of our archipelago.

The development of rural airports will permit speedy access and reasonable costs to
promote and enhance the following activities for our rural areas:

a) The transport of personnel and cargo;

b) The increase in commercial activity through the speedy delivery of products and
services;

c) Improvement of domestic and international tourism;

d) Immediate availability of emergency, rescue, disaster relief services;

e) Improvement of communications, mail, money transfers and packages to and from
the rural areas;

f) Prompt delivery of government services;

g) Assistance to the Armed Forces of the Philippines in matters of national security,

h) Speedier police responses to problems of banditry and other peace and order
matters;

i) Extension of agricultural and environmental services, such as: enhanced crop
productivity through aerial application, rainmaking and drought alleviation through
aerial seedings, and reforestation and pest control through air broadcast
technologies;

j) Enhanced surveillance of our natural resources including forestry, coral reefs and
animal and marine life.


The government, in tie up with the private sector, shall undertake the identification,
construction, repair, maintenance, modemization and activation of rural infrastructures.

The Air Transport Office currently supervises 68 airports. Many of them are ill equipped,
expensive to maintain in relation to the low traffic, and are obviously a drain on the national
budget. Yet, so many of our rural areas have no airports at all. If they do, they are either
inadequately or not maintained at all and are so difficult to service. To cite:

a) These rural airports are usually of the "bush" type; they are short, unpaved, grass,
dirt or merely flattened airstrips, often unattended; some have obstacles that aircraft
landing and take-off can be made only one way. Only the lightest of aircraft can
handle them.

b) These airfields have no air safety personnel or equipment available.

©) There are no reserve pitots or mechanics.

d) There are no refueling depots.

e) There are no repair stations and aircraft rescue during breakdown is difficult.

f) There are no guidance systems, no communications systems, no security systems
and no electricity to support aircraft or air terminal operations.

9) There are only poor or even no access roads, piers or other complementary
transport services.

h) As they are usually located away from towns due to topographical limits, there are no
board and lodging or storage facilities nearby to serve passengers and cargo.

i) There are often no police or even private security agencies to prevent lawlessness
and banditry or to react them.

i) In many parts of the Visayas and in practically all of Mindanao outside the larger
cities, there are serious peace and order problems.

The need to develop and/or operate rural airports is particularly needed in the island
of Mindanao where the country faces serious insurgency and kidnapping problems.

It would be ideal to have each town and city in the Philippines have its own rural airport
or at least easy access to such an airport so that the entire population can be within two hours
from any major airport or urban area in the Philippines

But the Air Transportation Office which is the agency tasked with the development of
airports has limited or no funds not only to supervise the existing airports, but also to establish,
operate and maintain other airports, particularly those in the rural areas, The government
budgetary deficits point to an even bleaker picture for these rural airports and the inability to
adequately maintain the existing ones in the face of rising operating and capital expenses.

The inadequate resources of the Air Transportation Office render it ineffective in
providing full support for the Rural Air Transport System. The rural airports are unattended and
the intricacies and peculiarities of a rural air transport system are not appreciated. ATO
Guidelines normally applicable to more sophisticated aircraft and airports as in Manila tend to
be applied to the rural airports where conditions are entirely different. Unnecessary sanctions
have often been applied to rural air transport operators that obviously hinder rural growth and
development. Needless to say, these cause drains on the operators’ financial resources that
further adversely affect whatever upgrading programs may have been in place. An example of
how a rural air transport operator was treated is cited in an annex to this note, authored by a
former Secretary of the Department of Transportation and Communications.

In reality, the ATO has limited facilities and/or funds to regulate the rural airports. Due to
these limitations, the ATO has not been able to help promote rural development through a well-
planned program intended to develop the rural airport network.

On the other hand, all air transport, particularly of the rural type, has built-in safety
mechanisms that for most, if not all, intents and purposes make ATO supervision practically
superfluous. This natural built-in safety mechanism is the life and livelihood of personnel
devoted to rural air transport, such as the pilots and the mechanics who maintain the aircraft
They will have to see to it that their equipment flies within adequate bounds of safety since their
lives, limbs and livelihood depend on them


In other countries with remote rural areas and large hinterlands, such as Norway and
Canada, their bush airports are not only government-owned, constructed, supported and
maintained, but air transportation to and from these airports is heavily subsidized by the state.

With the exception of airports located in large cities, such as Manila (NAIA) and Cebu
(MCIAA), many missionary airports and certainly all rural airports are impossible to privately or
publicly operate at a profit. That is the reason why the private sector has been timid in entering
this area. For true development to take place, the private sector is an indispensable catalyst.
Indeed, there can be opportunities for these hubs of commerce to be built and to grow on their
own on a strictly private basis without any government support.

It would be ideal for the private sector to undertake these activities strictly on its own,
without any subsidy from government, only with the proper incentives to do so. Such incentives
are provided anyway to other spheres of economic activity that government wants to encourage.
If the proper incentives are not provided to the construction, operation and maintenance of rural
airport, there will be no downstream domestic activities to eventually tax or even regulate.

Approval, therefore, of the attached bill is earnestly requested

Y
ie ae
JUAN EDGARDO “SONNY” M. ANGARA
Representative

Lone District, Province of Aurora


FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session )

510

H.B.No.

Introduced by Honorable JUAN EDGARDO “SONNY” M. ANGARA

AN ACT
GRANTING THE RIGHT TO FRANCHISES TO DEVELOP THE RURAL
AIRPORT INFRASTRUCTURE NETWORK IN THE PHILIPPINES FOR
COMMERCIAL AND OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Franchisee. - The provisions of this Act shall be available to any
congressional franchise holder engaged in rural air transport operating any type of fixed or
rotary wing, land or sea type of aircraft.

SEC. 2. Definition of Term.- Rural Airport. - As used in this Act, a rural airport shall
mean any runway, take-off and landing area or seaway, at least one thousand two hundred
(1,200) meters in length and with a suitable aircraft movement area which may be accessed by
any type of aircraft rated by its manufacturers to utilize the facilities.

Such airports are those which, due to their remoteness, lack the presence and
continuous operations of any government regulatory body.

Such an airport shall be so certified as a regular destination by any franchisee.

SEC. 3. Construction, Management, Operation and Maintenance of Rural Airport. -
‘Any Franchisee may construct, manage, operate and/or maintain any rural airport in any part of
the Philippines in order to eventually make each municipality regularly accessible within easy
reach of the principal and proximate urban areas.

SEC. 4, Use of Private Airports. Subject to some limitations as the Air Transportation
Office may prescribe, all existing private airports are hereby mandated to accommodate rural
aircraft; Provided that said private airports may charge reasonable fees for the use of the
airport.

SEC. 5. Use of National, Provincial or Municipal Road. - In cases of emergency and
in the absence of any private airport, any national, provincial or municipal road may be used for
take-off and landing purposes, provided these are delineated and previously approved by the

1


municipal or provincial government for such use, provided further, that the features of the said
airports are within the specifications and operating limits according to the manufacturers of the

aircraft employed and provided finally, that adequate safety standards are followed by the
franchisee.

SEC. 6. Development of the Surrounding Area of the Airport. - In order to encourage
industries to be developed within the immediately surrounding area of the airport, the
Franchisee may establish, manage, lease and operate the following activities: aircraft hangar;
educational facilities for aircraft mechanics, pilot and personnel; warehouses, light industry,
commercial and financial facilities; hotel guest house and tourism facilities; and
telecommunications facilities to support activities, provided these facilities are within five

hundred-meter (500 m) radius of the runway of said airports, subject to existing laws of the
Government.

SEC. 7. Government Use. - The Franchisee, with the use of its own aircraft and airport
facilities may provide said services to any branch of the Armed Forces of the Philippines or any
government agency for compensation

SEC. 8. Right to Purchase or Lease. - The Franchisee shall have the right to purchase
and/or lease, whichever is applicable and available, adequate space at any government or
government agency owned airport, aerodrome, or air terminal for purposes of linking the rural

air transport system with national and international flight and, providing necessary support
services.

SEC. 9. Right to Operate. - The Franchisee shall be allowed to operate along the trunk
line, to carry and pick up passengers to and from the rural airports.

SEC. 10. Insurance Coverage. - The Franchisee shall be required to cover all
passengers and cargo with insurance as specified by the Air Transport Office or the Civil
Aeronautics Board. Any third party liability of the Franchisee shall be limited to the amount of
the insurance cover so specified.

SEC. 11. Franchisee as Deputy of ATO. - Whenever the Air Transport Office is not
present in any airport point of origin or destination within the Philippines, the Franchisee shall
automatically assume the status as the deputy of the Air Transportation Office for air safety
purposes.

In cases of extreme urgency for necessary repairs, the Franchisee shal1, so as not to
jeopardize the operations of the airport and/or the aircraft, cause the necessary repairs, subject
to reimbursement by the Government.


The Franchisee, as well as the airports operated by the Franchisee shall not be subject
to any restrictive operations by any government agency except those that pertain to the national
interest. Regular reports on all airports operated by the Franchisee shall be made by the
Franchisee to the ATO.

SEC. 12. Report to the Office of the Transportation Secretary. - In case of
emergencies, the Franchisee is mandated to report any operational hazards or imminent danger
involving national security within the airport premises to the Office of the Transport Security.

SEC. 13. Safety Requirement. - All rural aircraft shall comply with the minimum safety
requirement prescribed by the Air Transportation Office,

SEC. 14, Tax Incentives. - The Franchisee as operation of rural airport shall be exempt
from any and all taxes, including income, capital gains, lease, rental, gross, value-added, ad
valorem, compensating, import and export duties on its aircraft parts and maintenance and
overhauling equipment, interest on loans and dividends on investment contracted or granted,
fuel, oil, and real estate taxes.

In lieu of said taxes, the Franchisee shall, as the Air Transportation Office deems
necessary, and after going over the financial records of the Franchisee, regularly adjust the
airfare rate to make it more affordable to passengers as compared to the prevailing rates of
other commercial airlines.

SEC. 15. No Disruption Policy. - As the rural airport is vital to the air transport system
in particular and the economy in general, its operations may not be disrupted by any agency
unless specifically approved by the President of the Philippines and such disruptions shall not
exceed thirty (30) days for any one occasion.

SEC. 16. Duration of the Privilege. - These powers and privileges herein presented to
an eligible Franchisee shall be valid for twenty-five (25) years and renewable for another twenty-
five (25) years, unless invalidated by Congress.

SEC. 17. Penalty. - Violators of this Act shall be subjected to a fine of ten thousand
pesos (Php10,000.00) or imprisonment of six (6) months, or both, for any offense against the
provisions of this Act

SEC. 18. Separability Clause. - If any of the provisions of this Act is declared
unconstitutional, the other provisions shall remain valid.

SEC, 19. Repealing Clause. - All other decrees, laws, rules and regulations, and other
issuances or parts thereof, inconsistent with this Act are hereby repealed or modified
accordingly.


SEC. 20. Effectivity. - This Act shall take effect after fifteen (15) days from its publication
in at least two (2) newspapers of general circulation.

Approved,