Permits, Licensing and Regulation by Civil Aeronautics Board
- Cebu Air must secure appropriate permits and licenses from the Civil Aeronautics Board for operations.
- All aircraft and equipment must be kept airworthy, with government-licensed crew members.
- Equipment must have radio communication, safety and other prescribed apparatus.
- Operations and equipment subject to inspection by the Air Transportation Office.
- Compliance mandated with R.A. No. 776 and related regulations.
Obligation to Public Transport Services
- Cebu Air to maintain scheduled, non-scheduled, and charter air services across the Philippines and internationally, subject to weather conditions and force majeure.
- At least 25% of total flight frequencies must serve domestic routes.
Rate Setting and Regulation
- Rates for passenger, mail, goods, and freight transportation must be just and reasonable.
- Rates are subject to regulation and approval by the Civil Aeronautics Board and other government agencies.
Franchise Term and Revocation
- Franchise valid for 40 years from approval date, unless revoked or cancelled earlier.
- Failure to commence operation within 2 years results in automatic revocation of the franchise.
Use of Landing and Airport Facilities
- Authorized use of government-owned landing and airport facilities subject to terms set by the Philippine Government.
- Philippine Government retains reciprocal right to use grantee's airport facilities within the country.
Contracts and Preferential Government Engagement
- Authorized to enter contracts with the Philippine Government, including mail carriage, with preferential consideration.
- May engage in contracts with foreign airlines, especially on international routes.
Government's Right to Takeover
- In national emergencies, the government can take over and operate the grantee’s equipment, compensating for use or damages.
Public Equity Participation Requirement
- Must offer at least 30% of common stocks to the public within 10 years.
- No single person or entity may own more than 5% of the stock offerings.
Warranty and Hold Harmless Clause
- Grantee shall hold national and local governments harmless from claims arising out of accidents or injuries caused solely by grantee's operations.
Tax Obligations
- Grantee shall pay 5% franchise tax on gross transport operation revenues.
- Subject to income and real property taxes as per existing laws.
- Ensures parity if competitors receive tax privileges.
Restrictions on Transfer and Assignment
- Franchise and rights cannot be transferred, leased, sold, or assigned without prior congressional approval.
- Any assignee is subject to all conditions of the franchise.
Legislative Amendments
- Franchise is subject to amendment or repeal by Congress in the interest of the common good.
Separability Clause
- Invalidity of any provision does not affect validity of the remaining provisions of the franchise.
Repealing Clause
- All inconsistent laws, decrees, orders, and regulations are repealed or modified accordingly.
Effectivity
- The Act takes effect 15 days after publication in at least two national newspapers.