Regulatory Compliance and Aircraft Standards
- Grantee must secure permits and licenses from the Civil Aeronautics Board (CAB).
- All aircraft and equipment must be airworthy and meet requirements of the Air Transportation Office (ATO).
- Crew members must be licensed by the Philippine government.
- Equipment must have radio communication and safety devices, subject to inspection and regulation by ATO.
- Compliance with Republic Act No. 776 and related regulations is mandatory.
Obligation to Maintain Air Transport Services
- Grantee must maintain scheduled, non-scheduled, or chartered services to all points in the Philippines and internationally, except in cases of force majeure or adverse weather.
- At least 25% of flight frequencies must service the domestic market.
Rates and Pricing
- The grantee is required to fix just and reasonable rates for transportation services.
- Rates are subject to approval and regulation by the CAB and relevant regulatory agencies.
Franchise Term and Conditions for Revocation
- Franchise term is 25 years from effectivity unless revoked or cancelled earlier.
- Revocation occurs if the grantee fails to:
- Commence operations within one year from CAB permit approval.
- Operate continuously for two years.
- Commence operations within two years from the law’s effectivity.
Acceptance of Franchise
- Written acceptance must be given within 60 days of the law’s effectivity.
- Failure to accept renders the franchise void.
Bond Requirement
- Grantee must file a bond in favor of CAB, amount to be determined by CAB.
- The bond guarantees compliance with franchise conditions.
- Bond forfeiture and franchise revocation occur if conditions are not met within three years from CAB permit approval.
Use of Landing Facilities
- Grantee may use government-owned or maintained landing and airport facilities within the Philippines, subject to terms and national policy.
- The government retains the right to use facilities owned by the grantee.
Authority to Contract
- Grantee authorized to enter transportation contracts with the Philippine government, including mail carriage.
- Must give preferential consideration to government contracts.
- May enter contracts with foreign airlines, especially those with international routes, for services related to air transport.
Government’s Special Rights
- The President may, during war, public peril, calamity, emergency, or disturbance, temporarily:
- Take over and operate grantee’s facilities or equipment.
- Suspend operations of facilities or equipment.
- Authorize government agency use of such facilities, with due compensation.
Hold Harmless Provision
- Grantee must hold national and local governments harmless against claims or actions from accidents or injuries caused by services under the franchise.
Restrictions on Transfer and Ownership Changes
- No lease, transfer, grant of usufruct, sale, assignment, merger, or transfer of controlling interest without prior Congressional approval.
- Any assignee or transferee is subject to the same franchise conditions.
Dispersal of Ownership
- Grantee must offer at least 30% of outstanding capital stock to the public via a securities exchange within five years of commencing operations.
- Failure to comply results in automatic revocation of the franchise.
Non-Exclusivity and Equal Treatment
- Franchise grant is non-exclusive.
- If competitors receive more favorable terms, those terms become applicable to the grantee as well.
Separability Clause
- If any provision is held invalid, other provisions remain valid.
Amendment and Repeal
- Congress may amend, alter, or repeal the franchise for public interest.
- The franchise does not confer exclusive privileges.
Reportorial Requirements
- Grantee must submit an annual report to Congress on compliance and operations within 60 days after year-end.
Effectivity
- The Act takes effect 15 days after publication in two newspapers of general circulation, initiated by the grantee.