Republic of the Philippines

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HOUSE OF REPRESENTATIVES a “aN
Quezon City RECEIVED
THIRTEENTH CONGRESS
First Regular Session \

House BillNo.__ 2.10

Introduced By Hon. Rozzano Rufino B. Biazon

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, i.e. 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

Improvement of domestic and international tourism

Immediate availability of emergency, rescue, disaster relief services

¢. Improvement of communications, mail, money transfers and packages to
and from the rural areas.

£ Prompt delivery of government services

g. Assistance to the Armed Forces of the Philippines in matter of national
security

h. Faster police response 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

ae


The development of the rural airport infrastructures network should be
achieved by identifying, constructing, repairing, maintaining, modemizing and
activating these airports on a purely private basis by evolving them into economic
centers that will more readily provide the above-cited services.

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 not maintained or are inadequately maintained and 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

‘These airfields have no air safety personnel or equipment available

These are no reserve pilots or mechanics

There are no refuelling depots

There are no repair stations and aircraft rescue during breakdown is

difficult

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 the service
passengers and cargo

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

j. Inmany parts of the Visayas and in practically all of Mindanao outside the
larger cities, there are serious peace and order problems

pao

ao

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

Currently, the scheduled main carriers have access to no more than 30 airports
‘throughout the Philippines, including the major ones cited earlier. There are 230
more airports that are beyond the reach of scheduled flights. Most of them are not
even rated (at least currently) by the Air Transport Office. If one were to take the
aggregate population size in all cities and towns served by the scheduled carriers,
including those within 20 kilometers radius of their regular destinations, one will find
that 70% of our entire population is beyond the reach of scheduled air transport. That
is the sector of the population that rural airports are meant to serve

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 airport sot that the entire
population can be within two hours from any major airport or urban area in the
Philippines.

However, the government Air Transport Office, 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 Transport 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 Mania 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.

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, have built-in
safety mechanisms that for most if not all intents and purposes makes 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 it.

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 are 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. Meaningful development takes place
only through private commerce. 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 airports, there will be no
downstream domestic activities to eventually tax or even regulate.

These factors are what this law intends to address.

Ah,
RO vx lads bef.
Re

epresentative
Lone District, Muntinlupa City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
THIRTEENTH CONGRESS
First Regular Session

House Bill No. 210

Introduced By Hon. Rozzano Rufino B. Biazon

AN ACT GRANTING THE RIGHT TO FRANCHISEES 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 of the Philippines in
Congress assembled:

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

SECTION 2. A Rural Airport is, as used in this act, any runway, take-off and
Janding area or seaway, not exceeding 1,200 meters in length, with a total land area
not exceeding 20 hectares, which may be accessed by any type of aircraft rated by its
manufacturers to utilize said facilities, Such airports are those which, due to their
remoteness, lack the presence and continuous operations of any goverment
regulatory body. Such an airport shall be so certified as a regular rural destination by
any Franchisee.

SECTION 3. 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 or within easy reach of the principal and proximate
urban areas with at least 100,000 population.

SECTION 4. Any 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 specificatons and operating limits according to the
manufacturers of the aircraft employed; and, provided finally, that adequate safety
satandards are followed by the Franchisee.

SECTION 5. 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
such as but not limited to aircraft repair and maintenance and training 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 its activities, provided these facilities are within 500 meters of the
runway of said airports.

SECTION 6. 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 to be compensated either in cash of in the equivalent amount
of aviation fuel to be drawn from any other government branch equivalent amount of
aviation fuel to be drawn from any other government branch or agency in areas where
these are available within terms mutually acceptable to both parties.

SECTION 7. To relieve the government of the expenses in maintaining rural airports
and other missionary destinations, and as a variation of the build operate and transfer
law, the Franchisee may take over the management, maintainance and operation of
any existing goverament agency operated rural airport, provided that the Franchisee’s
own annual operating costs for the same airport do not exceed 50% of the current
government agency costs of operating and maintaining said airport, adjusted for an
annual increment not to exceed 10% per annum. All subsequent operating expenses
of the airport and the air terminal shall be for the account of the Franchisee. The
savings to the government agency due to the relief from operating the airport and
terminal may be employed for other airport infrasturcture projects elsewhere,

SECTION 8. The Franchisee, shall have the rights to purchase and/or lease,
whichever is applicable and available, adequate space at any goverment or
government agency owned airport, aerodrome, or air terminal for purposes of linking
the rural air transport system with national and international flights and providing
necessary support service.

SECTION 9. The Franchisee shall be required to cover all passengers and cargo with
insurance as specified by the Air Transportation Office (ATO) or the Civil
Aeronautics Board. Any third party liability of the Franchisee shall be liminted to the
amount of the insurance cover so specified

SECTION 10. Whenever the ATO is not present in any airport point of origin or
destination within the Philippines, the Franchisee shall automatically assume the
status as deputy of the Air Transportation Office for air safety purposes. 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.

SECTION 11. The Franchisee shall exercise authority as may be necessary within
its premises or airports of operaton and carry out its functions, provided that the
Franchisee may request the assistance of law enforcement agencies, including
deputization as may be required. Such authority shall be exercised in connection with
the following:
(a) Maintenance of safety and security to passengers, cargoes, aircraft, airport
equiptment, structures, facilities, personnel, funds and documents;
(b) Regulating the entry to, exit from and movement within the airports;
(c) Maintenance of peace and order within the premises;
(d) Contracting of private security agencies;
(e) Removal of natural obstructions that affect safety of take off and landing
such as tress without need of r government clearances.
( Enforcement of rales and regulations promulgated by the Franchisee
pursuant to law.

In case of emergencies or imminent danger involving national security withing the
airport premises, the Philippine Air Force Security Command shall take charge.

SECTION 12. The Franchisee as operators of rural airports sahll 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


pay the government, through the National Treasury, 5% of the gross revenues charged
for all landing and take-off fees being charge on certified rural airports.

SECTION 13. The provisions of existing laws to the contrary not withstanding,
obligations of the Franchisee to any government agency or instrumentality may be
automatically offset or compensated against receivables or credits of the Franchisee
from any other government agency or instrumentality. It shall be the responsibility of
the Budget Commissioner and/or the National Treasurer to see to refunding or, if need
be the restoration in the appropriations act of the receivables or credits of the
government agency or instrumentality concerned that were used to offset or
‘compensate the liabilities of another government agency or instrumentality.

SECTION 14. The Franchisee shall be authorized to purchase, lease, construct,
rehabilitate, modernize, improve rural airports as defined in theis Act and apply for
offset in accordance with Section 13 its expenses, provided that the amounts do not
exceed 50% of the equivalent costs of the government airport nearest to the certified
rural airport. The Franchisee shall also be authorized to manage, maintain and
administer said rural airports and apply its costs of management, administration and
maintenance to its right to offset under Section 13, provided such costs do not exceed
50% of the current management, adminstration and manintenance costs of the
government airport nerarest to the certified rural airport.

SECTION 15. The Franchisee shall not be required to comply with the provisions of
Presidential Decree No. 442 as amended, subject however to periodic review by the
Department of Labor and Employment.

SECTION 16. As rural airports are vital to the air transport system in particular and
the economy in general, the operations of rural airports or the franchisees shall not be
disrupted by any agency unless specifically approved by the President of the
Philippines and such disruption shall not exceed thirty days for any one occasion.

SECTION 17. Violators of this act shall be subject to a P10,000.00 fine or
imprisonment of six month or both for any offense.

SECTION 18. If any of the provisions of this Act is declared unconstitutional, the
other provisions shall remain valid.

SECTION 19. These powers and privileges herein presented to an cligible
Franchisee shall be valid for fifty years and renewable for another fifty years, unless
invalidated by Congress.

SECTION 20. This act shall take effect upon its approval.

Approved,