FOURTEENTH CONGRESS OF THE } 
REPUBLIC OF THE PHILIPPINES 
} 
First Regular Session 
I 
S E N A T E  
S. No. 
39 
Introduced by Senator Edgardo J. 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, Iloilo 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, Le. 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, modernization 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 mereIy ff attened 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. 
c. There are no reserve pilots 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. 
g. 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. 
j. 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. AT0 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 AT0 has limited facilities and/or funds to regulate the rural 
airports. Due to these limitations, the AT0 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 
AT0 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 
EDGA % 
DO /$-L. 
. A  GARA 


FOURTEENTH CONGRESS OF THE } 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
1 
Introduced by Senator Edgardo J. 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 the House of Representatives 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.- 
a. 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 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 hangarage; 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 shaI1, 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 (PhplO, 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,