What Reciprocal Rights?

We can't even fly more to Japan - Lance

April 15, 2011

Cebu Pacific CEO Lance Y. Gokongwei questioned yesterday the draft implementing rules of Executive Order 29 adopting a pocket open skies policy which did not incorporate truly their concern over the lack of reciprocal rights under the said order which declared an Open Skies policy for all our airports, except Manila.

He said that while the Philippines should pursue open skies, specifically with Japan, the Asean, Middle East and Europe it has to be under the principle of reciprocity, Cebu Pacific CEO Lance Y. Gokongwei declared Thursday.

But “Let us have Open Skies for all, not Open Skies for foreign airlines and Closed Skies for Filipino carriers.” Gokongwei said.

He added that the provisions of Rule IV under the draft IRR EO 29 (transformation of operating rights into traffic rights) tend to contradict each other.

For example, Rule 4.1 of the draft IRR provides that the Philippine Air Panels (PAR) and the Civil Aeronautics Board (CAB) shall hold talks with the respective states of registry of the carriers operating under EO 29 for the conversion of operating rights into traffic rights. This, the rule said, shall include the inclusion of reciprocal grant to Philippine carriers of equivalent traffic rights by the said states.

Rule 4.2, meanwhile, provides that the CAB, in case of failure to reach mutual agreement to grant reciprocal rights to Philippine carriers within 12 months from the grant mentioned in the preceding rules, may revoke the conversion of operating rights into traffic rights.

"The contradiction however lies under Rules 4.3 and 4.4." Gokongwei said.

According to Rule 4.3, notwithstanding the non-inclusion of traffic rights mentioned in Rule 4.1 in the relevant air service agreement (ASA), the CAB may continue to allow operation of traffic rights under EO 29 if it deems it to promote national interest and/or mutual benefits.

Rule 4.4, on the other hand, says the CAB reserves the right to revoke, suspend, or restrict operations granted in the event the state of registry of the foreign carrier operating under this grant failed to extend reciprocal rights and/or equal opportunity to Philippine carriers.

Gokongwei said the government has to explain why it had to include in the draft IRR Rules 4.3 and 4.4 which contradict the reciprocity rule provided in Rules 4.1 and 4.2

The Air Service Agreements (ASA), or bilaterals, governs the civil aviation relationship between states that are parties to it. Traffic rights, meanwhile, is a market access right which specifies who or what may be transported over an authorized route or parts thereof in the aircraft.

A foreign air carrier’s permit (FACP) is a permit issued by the CAB and approved by the President which authorizes a foreign carrier to engage in foreign air transportation. A temporary operating permit (TOP), on the one hand, is the authorization issued by the CAB for a fixed term for the operation of scheduled or non-scheduled services by an air carrier pending the issuance of a FACP.

An FACP or TOP is a condition before any foreign carrier is granted operating rights under EO 29.

EO 29 seeks to further liberalize civil aviation in the Philippines, specifically to airports other that the Ninoy Aquino International Airport (NAIA) and “to promote a more liberalized policy for the expansion of direct air services, both passenger and cargo to secondary gateways outside of Metro Manila in order to advance domestic tourism…”

It provides that the Philippine Air Panel may offer third, fourth or fifth freedom traffic rights without restrictions on frequency, capacity and type of aircraft and other arrangements in the consideration of national interest as may be determined by the CAB.

The third freedom gives the right to fly from one’s own country to another while the fourth freedom covers the right to fly from another country to one’s own. The fifth freedom is the right to carry passengers from one’s own country to a second country, and from that country to a third country.

"If foreign carriers are given unlimited access on routes to and from the Philippines, we believe it is only fair, that CEB and other local airlines be given unlimited access to and from the Philippines to these carriers’ home countries, on an equal opportunity of access; on a level playing field" Gokongwei stressed.

"We should be allowed to compete with these foreign carriers on those same routes, and offer our trademark low fares not only to their nationals/tourists but to our own OFWs as well who live or work there. This is reciprocity and is most fair".

"But with Japan blocking our way to do that, where is reciprocity there?" Gokongwei said.

He complained that they cannot even get an authority to fly more flights to Osaka yet the Philippine government did not protest on the flight of ANA into the country.