Question & AnswerQ&A (EXECUTIVE ORDER NO. 219)
The primary constitutional basis is that the State shall regulate or prohibit monopolies when public interest requires, and no combination in restraint of trade or unfair competition shall be allowed, as provided by the Philippine Constitution.
The main objective is to improve air service availability, quality, and efficiency through exposure to foreign markets and competition in line with the Philippines 2000 strategy of global competitiveness and expanding investment and trade.
At least two (2) international carriers must be designated as official carriers for the Philippines.
Additional carriers may be designated if the existing designated carriers do not service the total frequency entitlement of the Philippines under existing Air Services Agreements or other arrangements.
The two key principles are (a) the National Interest, which includes promoting international trade, foreign investments, and tourism; and (b) Reciprocity, meaning the exchange of rights, freedoms, and opportunities of equal or equivalent value.
The Civil Aeronautics Board (CAB) has the sole prerogative to grant frequencies, capacities, and new routes to foreign carriers, subject to confirmation by the Office of the President.
The CAB regulates fares, rates, and charges of foreign designated carriers according to existing laws, considering reciprocity and value for the Philippines in granting discounted or promotional fares and rates.
Chartered flights and non-scheduled services may be authorized by the CAB provided they do not significantly divert traffic from scheduled services.
The policy encourages a minimum of two (2) operators on each route, allowing entry of new operators on routes serviced by a single operator, and recognizes the right of existing operators to leave routes subject to CAB findings that abandonment is uneconomical and in the public interest.
For routes with more than one common carrier, passenger rates are deregulated. For routes served by a single operator, passenger rates remain regulated, though all freight rates, charges, and passenger rates are monitored by the CAB.
The Department of Foreign Affairs (DFA) leads the initial negotiations for Air Services Agreements or similar arrangements.
The Philippine Negotiating Panel, chaired by the DFA and composed of representatives from the DFA, CAB, the designated carriers, and other authorized persons, leads negotiations for Air Services Agreements to protect national interests.
Third and fourth freedom rights are primary and based on reciprocity and the value for the Philippines, while fifth freedom traffic is secondary and supplemental, granted mainly to promote route development.
These are air services granted for the development of routes, destinations, and gateways, usually authorized for not more than one (1) year, including services connecting non-premier city airports in other countries to new international gateways in the Philippines under economic cooperation agreements.
All government agencies and instrumentalities, including government-owned or controlled corporations, are ordered to assist, cooperate, and support the implementation of this Executive Order.