Amendments to the Administrative Order No. 1 (Airport Fees and Charges) and the Policy Guidelines on the Admission of Tax-Exempt and Duty-Free Aircraft (TEDFA)

August 25, 2016 SBMA MEMORANDUM Certification No. 291-16 SUBJECT : Amendments to the Administrative Order No. 1 (Airport Fees and Charges) and the Policy Guidelines on the Admission of Tax-Exempt and Duty-Free Aircraft (TEDFA) This certifies that: The records of the Office of the Corporate Secretary show that during the Three Hundred Twenty-Third (323rd) Meeting of the Board of Directors of the Subic Bay Metropolitan Authority held last 29 July 2016 wherein there was a quorum to validly transact business, the following resolution was approved: Resolution No. 16-07-5904 "Resolve, as it is hereby resolved, that upon recommendation of Management and without prejudice to COA Regulations and pertinent laws on the matter, the Board hereby approves the amendments to the Administrative Order No. 1 (Airport Fees and Charges) and the Policy Guidelines on the Admission of Tax-Exempt and Duty-Free Aircraft (TEDFA). Management's Memorandum dated July 25, 2016 is incorporated herein by way of reference." Issued this 25th day of August 2016. (SGD.) RUBEN O. FRUTO Corporate Secretary ATTACHMENTS MEMORANDUM FOR : ROBERTO V. GARCIA Chairman and Administrator THRU : MARCELINO S. SANQUI SDA for Operations FROM : ZHARREX R. SANTOS Manager SUBJECT : BOARD APPROVAL AND RATIFICATION ON THE PROPOSED AMENDMENTS TO THE ADMINISTRATIVE ORDER NO. 1 (AIRPORT FEES AND CHARGES) AND THE POLICY GUIDELINES ON THE ADMISSION OF TAX-EXEMPT AND DUTY FREE AIRCRAFT (TEDFA) DATE : July 25, 2016 SBIA respectfully recommends for Board approval and ratification of the completed public hearings on the above-stated, to wit: 1st Public Hearing, 10 June 2016, presentation on the proposed amendments to Administrative Order No. 1 (Airport Fees & Charges) and policy guidelines on the admission of TEDFA. The Stakeholders submitted comments/recommendations on June 14, 2016 as requested by the Public Hearing Committee. CAIHTE 2nd Public Hearing, 12 July 2016, to resolve the comments of our Stakeholders. SBIA discussed and presented all the information to address the comments of our Stakeholders. The Stakeholders unanimously approved the implementation of the proposed amendments to Administrative Order No. 1 (Airport Fees and Charges) and the policy guidelines on the Admission of Tax-Exempt and Duty Free Aircraft (TEDFA). Below are the excerpt comments/recommendations from our Stakeholders and the corresponding SBIA response and recommendation, which are highly acceptable to our Stakeholders: I. Proposed amendments to the Administrative Order No. 1 on Airport Fees and Charges 1. Royalty Fee on the sale of Aviation Fuel, Oil, Grease and lubricants Original Fees Existing AO1 Aviation Fuel - $0.004/US Gallon ($0.0011/ltr) Oil - $0.015/US Gallon ($0.004/ltr) Grease - $0.015/pound ($0.033/kg) Throughput fee - $0.013/US Gallon ($0.0034/ltr) Proposed Fees at par with Clark Int'l Airport Corp. Increased by: Aviation Fuel - $0.09/ltr 8081.82% Oil - $0.27/ltr 6650.00% Grease - $0.31/kg 839.39% Throughput fee - $0.09ltr 2547.06% Stakeholders' comments and recommendation 1. . . . our purchase price is just at par with the retail price in Manila and way higher than other international airport in Asia. . . 2. It is also incumbent for the SBMA Administration to represent its Locators and file a case against BIR for the removal of the imposed value added tax and excise tax on petroleum and other petroleum products (RR-2012) including Freeport and Economic Zones. SBIA recommendation 1. SBIA recommends to retain the original fees. 2. SBMA made representation with SBMA Chairman regarding the concern for removal of the imposed value added tax and excise tax. SBIA/SBMA will solicit support from other government agencies in all possible venues. SBMA presented to the Dept. of Trade and Industry (DTI) the need to review and abolish memorandum circulars of BOC and BIR regarding charging of duties within Freeport Zone ( e.g. , jet fuel, movement of goods within Freeport) during the focus group discussion on the Philippine Logistic Master Plan last June 28, 2016. 2. Landing & Take-Off fees and Parking Charges 2.1 Landing & Take-Off Fees International Flight Original Fees Up to 50,000 kgs $1.84/500 kgs. or fraction thereof 50,001 to 100,000 kgs $184.00 plus $1.95/500 kgs. or fraction thereof in excess of 50,000 kgs. 100,001 - 150,000 kgs $398.75 plus $2.25/500kgs. or fraction thereof in excess of 100,000 kgs. From 150,001 kgs. and over $646.25 plus $2.40 per 500 kgs. or fraction thereof in excess of 150,000 kgs. Proposed Fees 5% lower than Clark Int'l Airport Corp. Up to 50,000 kgs. $1.71/500 kgs. or fraction thereof 50,001 to 100,000 kgs. $170.52 plus $2.14/500 kgs. or fraction thereof in excess of 50,000 kgs. 100,001 kgs. and over $383.30 plus $2.14/500 kgs. or fraction thereof in excess of 100,000 kgs. Stakeholders' comments and recommendation . . .the aircraft category should also be changed in order to provide reasonable charges too smaller aircraft. A Cessna 152 with a Maximum Take-Off Weight (MTOW) of less than 1,000 kgs would pay the same rate as the Gulfstream with an MTOW of 45,200 kgs. . . SBIA recommendation The computation of fees is based on the Maximum Take-off Weight (MTOW) of an aircraft. The SBIA proposed rate is 5% 7.33% lower than Clark International Airport Corp. 2.2 Parking Charges Original Fees International Flight Up to 50,000 kgs 1st half hour $3.00, each additional half hour thereafter or fraction thereof $3.00 50,001 to 100,000 kgs 1st half hour $17.00, each additional half hour thereafter or fraction thereof $5.00 100,001 and over 1st half hour $21.00, each additional half hour thereafter or fraction thereof $7.00 Domestic Flight Up to 50,000 kgs 1st half hour Php 20.40, each additional half hour thereafter or fraction thereof Php 17.00 50,001 to 100,000 kgs 1st half hour Php 195.50, each additional half hour thereafter or fraction thereof Php 45.90 100,001 and over 1st half hour Php 195.50, each additional half hour thereafter or fraction thereof Php 59.50 Proposed Fees 5% lower than Clark Int'l Airport Corp. International Flight Up to 50,000 kgs 1st half hour $1.36, each additional half hour thereafter or fraction thereof $1.36 50,001 to 100,000 kgs 1st half hour $13.00, each additional half hour thereafter or fraction thereof $3.00 100,001 and over 1st half hour $13.09 each additional half hour thereafter or fraction thereof $3.95 Domestic Flight Up to 50,000 kgs 1st half hour Php 17.65, each additional half hour thereafter or fraction thereof Php 14.70 50,001 to 100,000 kgs 1st half hour Php 169.02, each additional half hour thereafter or fraction thereof Php 39.68 100,001 and over 1st half hour Php 169.02, each additional half hour thereafter or fraction thereof Php 51.44 Stakeholders' comments and recommendation . . . the aircraft category should also be changed in order to provide reasonable charges to smaller aircraft. A Cessna 152 with an Maximum Take-Off Weight (MTOW) of less than 1,000 kgs would pay the same rate as the Gulfstream with an MTOW of 45,200 kgs. . . SBIA recommendation The computation of fees is based on the Maximum Take-off Weight (MTOW) of an aircraft. The SBIA proposed rates are 13.48%-13.54% and 23%-54.67% lower than Clark Int'l Airport Corp. on parking fees for domestic and International flights, respectively. 3. NOTAM Request/Aerodrome Closure for Non-Airport Activity DETACa Proposed New Fees Fireworks, Events and Others - Php 1,000/application Aerodrome Closure Event, Sky Jump and others Php 15,000/hour Stakeholders' comments and recommendation . . . the fee that should be charged for such activities should be significant to include possible revenue of all locators due to closure and cost of hiring additional security personnel to ensure safety and security. . . SBIA recommendation The charge does not only cover the event but all related airport operations that require NOTAM Closure, e.g. , RP-US Balikatan Exercises. SBMA upholds the interest of SBIA locators. Non-aviation event proposals are being discouraged by SBMA Board and offering other sites instead. 4. Removal of Irrelevant Fees Stakeholders' comments and recommendation Locators highly recommend such proposed amendments. 5. Imposition of 15% from Gross Revenue Sales provided by Third Party Service Provider, a non-airport locator. Proposed New Fee 15% from gross revenue sales Stakeholders' comments and recommendation Locators interpose no objection. SBIA recommendation The new fee shall be charged only to the Third Party Service Providers that are not classified as SBIA Locator. SBIA through the SBMA Accreditation Officer requires the Third Party Service Provider to register and accredit their company, which is not located within the SBFZ, in order that they may conduct regular business inside the Freeport Zone. II. Proposed amendments to the Policy Guidelines on the Admission of Tax Exempt and Duty Free Aircraft (TEDFA), engines, parts and accessories Original Fee Admission Permit Fee per aircraft: Php 25,000.00 Proposed New Fees Admission Permit Aircraft Php 25,000.00 per TEDFA unit Engines Php 15,000.00 per engine unit Parts, Tools and Accessories Php 5,000.00 per transaction on parts and accessories exceeding Php 100,000.00 Stakeholders' comments and recommendation 1. Locators have no objection with the proposed amendment except for the additional imposition of an admission fee for engines per unit and parts & accessories exceeding Php 100,000.00 2. Mr. Perry of PPI asked for clarification on the provision under Art. III, Sec. 4,d. No objection from Civil Aviation Authority of the Philippines (CAAP) on aircraft parts for Philippine Registered Aircraft Only. For him, this part seems to be not appropriate and illogical. SBIA recommendation 1. SBIA recommends to retain the existing fee for the admission of aircraft in the amount of Php 25,000.00 2. SBIA recommends the removal of one of the documentary requirements that is the submission of a No objection from Civil Aviation Authority of the Philippines (CAAP) on aircraft parts for Philippine Registered Aircraft Only. The SBIA recommended amendments to the Administrative Order No. 1 (Airport Fees and Charges) and the Policy Guidelines on the Admission of Tax-Exempt and Duty Free Aircraft (TEDFA) met the overwhelming approval of the Stakeholders. SBIA hereby trusts for your favorable consideration and approval of all the foregoing. Encl: (1) Public hearing minutes of the meeting (2) Stakeholders' comments and recommendation (3) Proposed amendments to the Administrative Order No. 1 on Airport Fees and Charges (4) Proposed Amendments to the Policy Guidelines on Tax-Exempt and Duty Free Aircraft (TEDFA), engines, parts and accessories MINUTES OF THE MEETING PROPOSED AMENDMENTS ON THE ADMINISTRATIVE ORDER 1 (AO1) AND THE TAX-EXEMPT AND DUTY FREE AIRCRAFT Transit Lounge, Bldg. 8050, Passenger Terminal Bldg., Argonaut Rd. SBFZ Friday, 10 June 2016 I. ATTENDANCE aDSIHc Mr. Marcelino Sanqui SDA for Operations, SBMA Mr. Zharrex R. Santos Airport Department, SBMA Ms. Florence Basobas Trade Facilitation and Compliance Department, SBMA Ms. Kristel Mae L. Nabor All Asia Aviation Subic, Inc. Mr. Terry Habeck Aviation Concepts Technical Services, Inc. Ms. Emma Bonsa Aviation Concepts Technical Services, Inc. Mr. Allan Fabricante Aerospeed, Inc. Ms. Stella Fuertes Best Aviation Insight, Inc. Mr. Kayejan Timbas Hacorphil Corporation Mr. Riche Paras Hacorphil Corporation Mr. Vicente Magsaysay Johanna-Subic Seafoods Corp./FFC Subic Seafoods Corp. Ms. Sharmaine Viray Johanna-Subic Seafoods Corp./FFC Subic Seafoods Corp. Mr. Robert Chester Liberty Call Logix Mr. Mark Hopkins Liberty Call Logix Mr. Scott Cahill Liberty Call Logix Ms. Reynalda Alcantara Liberty Call Logix Ms. Ryzza Sampano Omni Aviation Corporation Ms. Mabel T. Tejano Platinum Sides Aviation, Inc. Mr. Dennis Morales Platinum Skies Aviation, Inc. Mr. John Lyndon Nuez Platinum Skies Aviation, Inc. Mr. Curtis Perry PPI Consulting, Inc. Mr. Nomer Talibong PTT Philippines Corporation Mr. Jaylyn Zapata PTT Philippines Corporation Mr. Marcelino Atanante World Aviation Corporation Ms. Avlea Rica Torralba Trade Facilitation and Compliance Department, SBMA Representative from the Legal Department were unavailable due to prior commitment. The Secretariat made sure to the Chairperson that they were property informed of the meeting. Secretariat: Ms. Angelita R. Nafarrrete Ms. Riza S. Acedera Ms. Editha G. Bautista II. CALL TO ORDER There having a quorum, the Public Hearing was called to order at 10:10 am by the Chairperson Zharrex R. Santos, who welcomed and appreciated the presence of the Stakeholders of SBIA. PRESENTATION OF THE PROPOSED AMENDMENT TO ADMINISTRATIVE ORDER NO. 1 (AO1) After the participants have been acknowledged, the program proceeded to the presentation proper of the proposed Amendment to Administrative Order No. 1 or Airport Fees and Charges, Mr. PRT made a short note on the rationale of the amendments and discussed the following adjustments and revisions: 1) Adjusting of fees at 5% lower than Clark Int'l Airport Corp. (CIAC). a. Landing & Take-Off Fees b. Parking Charges c. Lighting Charges 2) Removal of Irrelevant Fees a. Operational Charges & Telecommunications Charges b. Telephone, Cable pair & Right of Way for Communication Facilities c. Other Utility Fees and Charges Permit for repair, renovation & improvement d. Cargo Terminal Building 3) Setting of Fees at par with CIAC a. Royalty Fee b. Passenger Service Charge c. Use of VIP lounge & VIP Assistance d. Check-in Counters e. Miscellaneous Fees and charges Access Pass, AMA Vehicle Pass, AMA Driver's Permit and others 4) New Fees and Charges a) Passenger Terminal Building Rental b) NOTAM request for Non-airport activity Fireworks, Events and others c) Aerodrome Closure - Event, Sky jump, and others Aircraft Follow Me d) Vehicle Escort e) Aircraft Marshaling f) Movie Filming, Commercial, Still Photography & Documentary g) In-Housed Cable Installation Services (Passenger Terminal & B8050) h) Vehicle Parking Fees & Vehicle Inspection for AMA Pass i) SBMA/SBIA Share for Airport Related Services 15% of Gross Income j) Penalties for Violation of SBIA Rules and Regulations on Pass & Loss Pass. ETHIDa A question and answer followed immediately after the first presentation had been made. Mr. Terry Habeck, ACI, expressed his appreciation to Manager Zharrex Santos to make SBIA a more competitive Airport but stated that in his opinion, benchmarking SBIA with CIAC is the first mistake in the whole process. CIAC has the equipment and fully functioning as an international airport. SBIA, on the other hand, has its landing strip mostly close due to the events being allowed at the airport, lacks the sustainability of continued operations of navaids, and radios in the tower. He stated that making SBIA rates 5% lower from CIAC has no effect with them. Establishing rate such as fuel by looking into CIAC rates and adjusting the current for SBIA is an error. SBIA should have looked into the retail price of the fuel to the clients so that they will be more competitive with the other airports. SBIA shouldn't have just looked into CIAC but other airports also such as Taiwan, Shen Zhen, and Macao. This countries have cheaper fuel. He made note that SBIA examines for how they will earn from royalties than the end retail price their clients gonna make. As a locator they are looking for which can give them lower operating cost. Mr. Habeck mentioned that SBIA has the highest Customs, Immigration and Quarantine (CIQ) fee among all the airports in the Philippines and as for them to cover from these bills they need to mark up the prices of their services. He reiterated that additional fees and benchmarking with CIAC is a mistake. He also recommended scrapping the proposed amendments and to put on another set of committee which involves locators. Mr. Curtis Perry, PPI Consulting Inc., agreed with Mr. Habeck. He stated that there is an item on the proposed amendment that seems charging way too little. These are the events that requires closure of the aerodrome. He commented that it should not only be Php1000 for an application per event but the organizer should pay the SBIA locators the full cost of the disruption of their operation. ZRS replied noted. PTT representative, Mr. Nomer Talibong, commented also on the proposed parity of SBIA with CIAC when it comes to the Royalty and Through Put Fees. He stated that if this will be implemented, based on his computation, the increase will just cover for the tax exemption locators are supposedly enjoying in SBFZ as the cost will just be pass on to them. Mr. Perry, asked for clarification on the 15% of Gross Income share for the SBMA/SBIA for Airport Related Services. ZRS explained that this fee will be imposed only for service operators that is not an SBIA Locator. Mr. Perry, asked if there is an individual from the private aviation sector/locator that is involved in the process of determining the rates? ZRS replied that the reason for these hearing is for SBIA to consult to the locators the proposed amendments and these is not yet final. MSS further explained that the presentation made by SBIA is open to change depending on the comments that will be received. Mr. Mark Hopkins, Liberty Call Logistics (LLC) asked for the time frame. MSS replied that the target implementation, if possible, is within this month but then reiterated that this depends on the comments that will be received. All the consolidated information, inputs and feedbacks will be presented to the SBMA Board approval and/or further guidance. Mr. Hopkins mentioned about the Open-Skies Policy and suggested to SBIA to build its guidelines based on this policy to be really competitive. He also suggested to set time frame for the locators for them to have enough time to negotiate and to come together. MSS appreciated his suggestion. Mr. Perry stated that they will appreciate if there will be locators involved in the deliberation of this guidelines and offers the experience of Aviation Concepts on the Aviation industry. Mr. Scott Cahill, LLC, asked if the events in Airport is being decided by the SBMA Board or only one person. MSS replied that this is the same concern SBIA Management have and explained that the recommendation for these events usually come from the other SBMA Departments and that the approval rest with the higher Management. MSS added that this issue will be relayed to the SBMA Board. ZRS further reiterated that SBIA Management is on the same stance with the locators and that SBIA always present its position but then the locators should understand that SBIA is part of the SBMA and that the final decision is with the higher Management. MSS stated that this hearing is a good opportunity to raise these concerns again with the Management and if the locators have additional written comments or inputs the Secretariat welcomes them until June 20, 2014. PRESENTATION OF THE PROPOSED AMENDMENTS TO THE POLICY GUIDELINES ON THE ADMISSION OF TAX EXEMPT AND DUTY FREE AIRCRAFT (TEDFA), ENGINES, PARTS AND ACCESSORIES Mr. PRT presented the proposed amendments to TEDFA Policy and guidelines. Mr. Perry, asked for clarification on the provision under Article III, Section 4, d. (No objection from Civil Aviation Authority of the Philippines (CAAP) on aircraft parts for Philippine registered aircraft only). For him this part seems to be not appropriate and illogical. MSS, replied that is an existing provision and if this provision is not applicable then this will be deleted and will be part of the amendment. Mr. Perry volunteered to collect and draft the collaborative response of the SBIA locators to the proposals of SBIA. IV. OTHER MATTERS Mr. Magsaysay, FFC, asked if there will be an office of CAAP that will offer front desk services in SBIA. ZRS replied that this concern has already been raised with CAAP and that SBIA will make some follow ups on this. III. ADJOURNMENT The meeting officially ended at around 11:25 a.m. Prepared by: (SGD.) RIZA S. ACEDERA Secretariat Noted by: cSEDTC (SGD.) ZHARREX R. SANTOS Chairperson, Public Hearing Committee June 14, 2016 To: Engr. Marcelino S. Sanqui SDA for Operations Engr. Zharrex R. Santos SBIA Manager Re: Comments/Recommendation Relative to the Proposed Amendments of Administrative Order No. 1 and Policy on Tax Exempt and Duty Free Aircraft, Engines, Parts and Accessories Gentlemen: While the purpose of making SBIA one of the players in the aviation world is commendable and necessary, the presented proposed amendments to achieve this objective is contradictory to the achievement of such goal, as the over-all concept and benchmarking used was not properly done. Currently, we cannot compare SBIA with DMIA as the latter is a fully functioning airport while the former is only a landing strip with no navigational aids, no reliable communications system, no GPS approaches and is not open 24/7. It is the only International Airport that allows the use of its facilities for non-aviation related activities such as triathlons and car racing, which increases the risk and safety of the airport, aircraft owners, locators and its employees. In order to make our airport competitive, we should address the above issues first and make the airport fully functional to be able to attract clients in making Subic as their alternate hub. It is understandable that the airport would require additional revenue for its upkeep and required maintenance. However, passing it on to its current locators who are already being deprived of a good service is already too much and unacceptable. Below are the detailed comments/recommendations relative to the proposed amendments to current airport fees and charges: 1. Royalty Fee on the sale of Aviation Fuel, Oil, Grease and lubricants Currently, our purchase price is just at par with the retail price in Manila and way higher than other International Airport in Asia such as Taipei, Macau and Shenzhen which is our real competitor. Any increase on the purchase cost will be a big disadvantage to all locators who are consuming/re-selling aircraft fuel. Subic fuel cost is the only benefit we could offer our prospective clients and increasing it will further decrease our opportunity to persuade them to operate in Subic. It is also incumbent for the SBMA Administration to represent its Locators and file a case against BIR for the removal of the imposed value added tax and excise tax on petroleum and other petroleum products (RR2-2012) including Freeport and Economic zones. We are fully aware of the rationale behind the adoption of Revenue Regulations No. 2-2012, which is to curb the "reported rampant smuggling of petroleum and petroleum products" by immediately implementing corrective measures to stop this activity in order to ensure the collection of correct taxes. However, such regulation should not be made to cover legitimate businesses inside the Freeport Zones which import petroleum products for direct utilization in its operations. A 12% deduction on the fuel rate will be an additional attraction to potential SBIA users. 2. Landing/Take Off Fees and Parking Charges Although the proposed amendment is to decrease the current rate, the aircraft category should also be changed in order to provide reasonable charges to smaller aircraft. Per the current structure, a Cessna 152 with an MTOW of less than 1,000kg would pay the same rate as the Gulfstream G550 with an MTOW of 45,200 kg. We are recommending the following aircraft categorization: o Light Aircraft less than 12,500 LBS (5,700 KGS) MTOW o Small Cabin Aircraft 12,501 LBS to 20,000 LBS MTOW (Approx.) o Medium Cabin Aircraft 20,001 LBS to 48,000 LBS MTOW (Approx.) o Large Cabin Aircraft 48,001 LBS to 100,000 LBS MTOW (Approx.) o Airliner Typically Aircraft Exceeding 100,000 LBS (45,400 KGS) MTOW There is no advantage to offering a lower rate than Clark as a difference of US$15.00 will not be a persuasive factor. However, charging a rate based on proper classification of aircraft will be a plus factor especially for light and small cabin aircraft that would want to use the airport for ferry flights or technical stops. 3. NOTAM request/Aerodrome Closure for non-airport activity Although these activities should not be allowed at any time for any reason, the fee that should be charged for such activities should be significant to include the possible revenue of all locators which was loss due to the closure, cost of hiring additional security personnel to ensure safety and security of all concerned locators as well as the increase in insurance premium that will be incurred by the aircraft owners as a result of the increased aircraft security risk. Should the SBMA Board approves such activity at a lower fee other than what SBIA will impose, it should be construed that SBMA will absorb the difference and will consequently reimburse the locators of what is due to them. SDAaTC 4. Imposition of 15% from Gross Revenue Sales provided by Third Party Service Provider The 15% share to be charged by SBIA to Third Party Service Providers at the airport will definitely help to increase the revenue of SBIA and the Locators interpose no objection to such proposal. However, a win-win situation may be achieved for both SBIA and its Locators if, instead of allowing a Third Party to provide their services at the airport, SBIA will mandatory require the client to get the services from SBIA and the latter will employ the services of its own Locators (depending on the type of services required). For such arrangement, SBIA may impose 15% commission on the gross revenue sales of the Locators. This is not applicable for contracts directly made by the client to the Locators. 5. Removal of Irrelevant Fees We highly recommend such proposed amendments. In summary, once the current issues on navigational aids and communications equipment have been resolved and SBIA becomes fully functional once again, it should seek to be the least cost airport by a significant margin amongst other international airports in the Philippines and in Asia until such time that our prospective clients become willing to operate their aircraft in Subic and opt to make this airport their new hub. Subsequently, the airport may gradually increase their fees and charges or even introduce new applicable fees that they may use for the regular maintenance and upkeep of its facilities and remain competitive with other international airports. SBIA should then create a committee to include major stakeholders who will review the airport charges and fees and provide significant insights and best industry practices that will ensure proper benchmarking process. Comments/recommendations on the proposed amendment on the policy and guidelines on the admission of Tax Exempt and Duty Free Aircraft (TEDFA), engines, parts and accessories. We have no objection with the proposed amendment except for the additional imposition of Admission Permit Fee for engines (per unit) and parts and accessories exceeding Php100,000.00 (per transaction). As a Locator providing Maintenance, Repair and Overhaul (MRO) Services for Foreign Registered Aircraft, we regularly import parts and/or accessories as may be required for the regular maintenance and/or repair of our own, managed and client's aircraft. We are all aware that aircraft parts and/or accessories for business jets are relatively expensive. Based on Aviation Concepts' importation history, on a monthly average, we import 5-10 times per month and the cost ranges between US$1500-3500, which means, we will end up paying such fees on a normal basis. However, our issue here is not actually the cost of the Admission Permit fee but the imposition of such fees particularly for aircraft parts and accessories only. An Admission Permit is not just being required for imported aircraft parts and accessories; it is also required for importation of raw materials for eye glasses, engines for cars and heavy equipment, parts and accessories for air conditioning unit, laptops and other electrical and computer equipment that are being manufactured here in Subic Freeport Zone. Why only impose the Admission Permit fee for aircraft engines, parts and accessories? The reason should not be just because SBIA needs additional revenue. There should be an acceptable anal justifiable reason on such proposal. Otherwise, it should not be imposed at all. Conforme: (sgd.) Aero Equipt Technical Services, Inc. (sgd.) Aerospeed, Inc. All Asia Aviation Subic, Inc. APG International Aviation Academy Asian Institute of Aviation Astro Air International, Inc. Aviair Aviation School, Inc. (sgd.) Aviation Concepts Technical Services, Inc. Best Aviation Insight, Inc. (sgd.) Challenger Aero Air Corporation Flight and Simulation Training Academy (sgd.) Jet Eagle International Limited, Inc. Johanna-Subic Seafoods Corporation (sgd.) Liberty Call Logix Lion Air Subic Phils., Inc. (sgd.) Omni Aviation Corporation Platinum Skies Aviation, Inc. (sgd.) PPI Consulting, Inc. Ramphos Corporation South Pac Defense Services, Inc. (sgd.) Subic Air, Inc. Vision Air and Sea Services, Inc. (sgd.) World Aviation Corporation June 14, 2016 To: Engr. Marcelino S. Sanqui SDA for Operations Engr. Zharrex R. Santos SBIA Manager Re: Comments/Recommendation Relative to the Proposed Amendments of Administrative Order No. 1 and Policy on Tax Exempt and Duty Free Aircraft, Engines, Parts and Accessories Gentlemen: While the purpose of making SBIA one of the players in the aviation world is commendable and necessary, the presented proposed amendments to achieve this objective is contradictory to the achievement of such goal, as the over-all concept and benchmarking used was not properly done. Currently, we cannot compare SBIA with DMIA as the latter is a fully functioning airport while the former is only a landing strip with no navigational aids, no reliable communications system, no GPS approaches and is not open 24/7. It is the only International Airport that allows the use of its facilities for non-aviation related activities such as triathlons and car racing, which increases the risk and safety of the airport, aircraft owners, locators and its employees. acEHCD In order to make our airport competitive, we should address the above issues first and make the airport fully functional to be able to attract clients in making Subic as their alternate hub. It is understandable that the airport would require additional revenue for its upkeep and required maintenance. However, passing it on to its current locators who are already being deprived of a good service is already too much and unacceptable. Below are the detained comments/recommendations relative to the proposed amendments to current airport fees and charges: 1. Royalty Fee on the sale of Aviation Fuel, Oil, Grease and lubricants Currently, our purchase price is just at par with the retail price in Manila and way higher than other International Airport in Asia such as Taipei, Macau and Shenzhen which is our real competitor. Any increase on the purchase cost will be a big disadvantage to all locators who are consuming/re-selling aircraft fuel. Subic fuel cost is the only benefit we could offer our prospective clients and increasing it will further decrease our opportunity to persuade them to operate in Subic. It is also incumbent for the SBMA Administration to represent its Locators and file a case against BIR for the removal of the imposed value added tax and excise tax on petroleum and other petroleum products (RR2-2012) including Freeport and Economic zones. We are fully aware of the rationale behind the adoption of Revenue Regulations No. 2-2012, which is to curb the "reported rampant smuggling of petroleum and petroleum products" by immediately implementing corrective measures to stop this activity in order to ensure the collection of correct taxes. However, such regulation should not be made to cover legitimate businesses inside the Freeport Zones which import petroleum products for direct utilization in its operations. A 12% deduction on the fuel rate will be an additional attraction to potential SBIA users. 2. Landing/Take Off Fees and Parking Charges Although the proposed amendment is to decrease the current rate, the aircraft category should also be changed in order to provide reasonable charges to smaller aircraft. Per the current structure, a Cessna 152 with an MTOW of less than 1,000kg would pay the same rate as the Gulfstream G550 with an MTOW of 45,200 kg. We are recommending the following aircraft categorization: o Light Aircraft less than 12,500 LBS (5,700 KGS) MTOW o Small Cabin Aircraft 12,501 LBS to 20,000 LBS MTOW (Approx.) o Medium Cabin Aircraft 20,001 LBS to 48,000 LBS MTOW (Approx.) o Large Cabin Aircraft 48,001 LBS to 100,000 LBS MTOW (Approx.) o. Airliner Typically Aircraft Exceeding 100,000 LBS (45,400 KGS) MTOW There is no advantage to offering a lower rate than Clark as a difference of US$15.00 will not be a persuasive factor. However, charging a rate based on proper classification of aircraft will be a plus factor especially for light and small cabin aircraft that would want to use the airport for ferry flights or technical stops. 3. NOTAM request/Aerodrome Closure for non-airport activity Although these activities should not be allowed at any time for any reason, the fee that should be charged for such activities should be significant to include the possible revenue of all locators which was loss due to the closure, cost of hiring additional security personnel to ensure safety and security of all concerned locators as well as the increase in insurance premium that will be incurred by the aircraft owners as a result of the increased aircraft security risk. Should the SBMA Board approves such activity at a lower fee other than what SBIA will impose, it should be construed that SBMA will absorb the difference and will consequently reimburse the locators of what is due to them. 4. Imposition of 15% from Gross Revenue Sales provided by Third Party Service Provider The 15% share to be charged by SBIA to Third Party Service Providers at the airport will definitely help to increase the revenue of SBIA and the Locators interpose no objection to such proposal. However, a win win situation may be achieved for both SBIA and its Locators if, instead of allowing a Third Party to provide their services at the airport, SBIA will mandatory require the client to get the services from SBIA and the latter will employ the services of its own Locators (depending on the type of services required). For such arrangement, SBIA may impose 15% commission on the gross revenue sales of the Locators. This is not applicable for contracts directly made by the client to the Locators. 5. Removal of Irrelevant Fees We highly recommend such proposed amendments. In summary, once the current issues on navigational aids and communications equipment have been resolved and SBIA becomes fully functional once again, it should seek to be the least cost airport by a significant margin amongst other international airports in the Philippines and in Asia until such time that our prospective clients become willing to operate their aircraft in Subic and opt to make this airport their new hub. Subsequently, the airport may gradually increase their fees and charges or even introduce new applicable fees that they may use for the regular maintenance and upkeep of its facilities and remain competitive with other international airports. SBIA should then create a committee to include major stakeholders who will review the airport charges and fees and provide significant insights and best industry practices that will ensure proper benchmarking process. SDHTEC Comments/recommendations on the proposed amendment on the policy and guidelines on the admission of Tax Exempt and Duty Free Aircraft (TEDFA), engines, parts and accessories. We have no objection with the proposed amendment except for the additional imposition of Admission Permit Fee for engines (per unit) and parts and accessories exceeding Php100,000.00 (per transaction). As a Locator providing Maintenance, Repair and Overhaul (MRO) Services for Foreign Registered Aircraft, we regularly import parts and/or accessories as may be required for the regular maintenance and/or repair of our own, managed and client's aircraft. We are all aware that aircraft parts and/or accessories for business jets are relatively expensive. Based on Aviation Concepts' importation history, on a monthly average, we import 5-10 times per month and the cost ranges between US$1500-3500, which means, we will end up paying such fees on a normal basis. However, our issue here is not actually the cost of the Admission Permit fee but the imposition of such fees particularly for aircraft parts and accessories only. An Admission Permit is not just being required for imported aircraft parts and accessories; it is also required for importation of raw materials for eye glasses, engines for cars and heavy equipment, parts and accessories for air conditioning unit, laptops and other electrical and computer equipment that are being manufactured here in Subic Freeport Zone. Why only impose the Admission Permit fee for aircraft engines, parts and accessories? The reason should not be just because SBIA needs additional revenue. There should be an acceptable and justifiable reason on such proposal. Otherwise, it should not be imposed at all. Conforme: (sgd.) Aero Equipt Technical Services, Inc. (sgd.) Aerospeed, Inc. All Asia Aviation Subic, Inc. APG International Aviation Academy Asian Institute of Aviation Astro Air International, Inc. Aviair Aviation School, Inc. (sgd.) Aviation Concepts Technical Services, Inc. Best Aviation Insight, Inc. (sgd.) Challenger Aero Air Corporation Flight and Simulation Training Academy (sgd.) Jet Eagle International Limited, Inc. Johanna-Subic Seafoods Corporation (sgd.) Liberty Call Logix Lion Air Subic Phils., Inc. (sgd.) Omni Aviation Corporation Platinum Skies Aviation, Inc. (sgd.) PPI Consulting, Inc. Ramphos Corporation South Pac Defense Services, Inc. (sgd.) Subic Air, Inc. Vision Air and Sea Services, Inc. (sgd.) World Aviation Corporation POLICY GUIDELINES ON THE ADMISSION OF TAX EXEMPT AND DUTY FREE AIRCRAFT (TEDFA), ENGINES, PARTS AND ACCESSORIES As approved by the Subic Bay Metropolitan Authority Board in Resolution no. 13-05-4772 dated May 17, 2013 and ratified on June 21, 2013 the Policy Guidelines on the Admission of Tax Exempt and Duty Free Aircraft (TEDFA) shall be imposed on all qualified locators of the Subic Bay Metropolitan Authority. Resolution No. 13-05-4772 Series of 2013 RESOLVE, as it is hereby resolved, that upon the recommendation of Management and without prejudice to COA regulations and pertinent laws on the matter, the Board hereby approves the Policy Guidelines on the Admission of Tax Exempt and Duty Free Aircraft (TEDFA), Engines, Parts and Accessories, as follows: WHEREAS, under Section 12(b) of Republic Act No. 7227, as amended by Republic Act No. 9400, the Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, and providing incentives such as tax and duty-free importations of raw materials and capital equipment; WHEREAS, under Section 13 of Republic Act No. 7227, as amended by Republic Act No. 9400, Subic Bay Metropolitan Authority (SBMA) is the management authority of the Subic Special Economic Zone; WHEREAS, there is a need to formulate rules and regulations pertaining to the duty free and tax-exempt admission privilege of aircraft by Subic Bay Freeport registered enterprises to prevent abuse; WHEREAS, TEDFA refers to the Tax Exempt and Duty Free Aircraft; NOW THEREFORE , for and in consideration of the foregoing promises, consistent with the Memorandum of Agreement between the SBMA and the Bureau of Customs (BOC) adopting and Implementing Customs Administrative Order No. 4-93 and in coordination and cooperation with the Civil Aviation Authority of the Philippines (CAAP), the following guidelines are hereby promulgated on the admission, registration and monitoring of Tax Exempt Aircraft, engines, parts and accessories: I. COVERAGE These guidelines shall cover the admission of aircraft and/or engines, replacement of parts and accessories thereof into the Subic Bay Freeport Zone. II. OBJECTIVES 1. To ensure that the duty free privilege of a Subic Bay Freeport Registered enterprise to admit TEDFA, engines, parts and accessories is not abused; 2. To ensure that the Tax Exempt Aircraft are principally used in connection with Subic Bay Freeport related flights or business; AScHCD 3. To ensure that Tax Exempt aircraft engines, parts and accessories are solely used in TEDFA and not used or sold outside the SBFZ; and 4. To ensure that locators admitting TEDFA lease sufficient and reasonable hangar space to house the TEDFA in SBIA. III. POLICY ON DUTY FREE AND TAX EXEMPT ADMISSION 1. Strict Application and Observance of SBFZ as hub or core base of Operations a. SBFZ locators shall be allowed admissions of TEDFA, engines, parts and accessories on the premise that the units shall be used primarily in support of and in furtherance to the business operations of the locator in the SBFZ. The minimum condition set by SBMA is that the units are principally based in SBFZ, in accordance with the stipulations provided in their Certificate of Registration and Tax Exemption, and that the TEDFA, returns, stays and uses SBFZ as their core base of operations such that at the end of each flying sortie these TEDFA returns, stays, uses and maintains physical presence at the SBIA. If such condition is not met, locators will have to pay duties and taxes for their TEDFA, engines, parts and accessories pursuant to Sec. 47 (B) of RA 7227 and relevant customs and internal revenue rules and regulations. b. The above provision shall not apply to tax-paid aircraft, engines, parts and accessories. 2. SBFZ Locators who are Qualified for Admission of Tax Exempt Aircraft, Engines, Parts, and Accessories: a. SBFZ locators engaged in international, domestic flight operations ( e.g. , General Aviation, etc.), and flying school operators. SBFZ locators with sufficient, reasonable hangar space, engaged in aviation and logistics activities as long as they can justify the need for the admission of aircraft units in relation to their business operation in Subic. It must be established, however, that all TEDFA, Engines, Parts and Accessories previously imported/admitted through Subic were used in connection with Subic as the admitting/importing locators' base of operations, that is, at the very least it can reasonably prove that they maintain active hub presence in SBFZ as their core base of operations as reflected in the flight plans submitted and filed at the SBIA who will in turn issue a certification confirming that the test of reasonableness and the locators' certification attesting to the previous years' flight logs are satisfactorily complied with. b. SBFZ Locators providing Maintenance, Repair and Overhaul (MRO) Services 1. MRO Service for Foreign Registered Aircraft (FRA) FRA subjected to MRO services in SBMA enjoys Tax-Exempt and Duty- Free Aircraft (TEDFA) privileges on engines, parts and accessories. 2. MRO Service for Republic of the Philippine Registered Aircraft (RPRA) not qualified under TEDFA policy Aircraft, engines, parts and accessories installed or put on used for Philippine Registered Aircraft shall be dealt with as ordinary importation and the payment of duties and taxes in accordance with the provisions of Tariff and Custom Code of the Philippines, as amended, and the National Internal Revenue Code, as well as other applicable laws of the Philippines. c. SBFZ Locators engaged in Trading Business SBFZ locators involved in buying-and-selling business of brand new and refurbished aircraft shall be only allowed for re-exporting. Otherwise, payment of duties and taxes levied or charged corresponding to the goods or items involved shall be made if these goods or items are to be sold, transferred, and assigned to buyers, transferee or assignee at the Customs Territory or outside of the SBFZ. d. SBFZ Locators not otherwise involved in aviation and logistics Subic Bay Freeport Zone locators not otherwise involved in aviation and logistics as long as they can justify the need for the units and are able to prove that they have put up actual investment of at least Php100 Million. 3. Admission of all TEDFA shall be approved by the SBMA Board. a. Admission of aircraft classified as hobbyist type and similar ones not in pursuit of or intended for business operations shall be at the discretion of the SBMA Board. 4. Documentary Requirements Subic Bay Freeport Zone locators intending to admit TEDFA, engines, parts and accessories thereof must submit the following documents: a. A valid Certificate of Registration and Tax Exemption (CRTE); b. Lease Agreement for hangar space at the Subic Bay International Airport (SBIA); c. Entry clearance from Civil Aviation Authority of the Philippines for ferry flight of a whole aircraft; d. No objection from Civil Aviation Authority of the Philippines (CAAP) on aircraft parts for Philippine registered aircraft only; e. Invoice documents for the aircraft units, engines, parts and accessories; f. Certification from the requesting company that the engines, parts and accessories shall be installed on a specific TEDFA for monitoring and recording purposes; and g. Certification from SBIA authorities attesting to the locator's good standing. 5. Admission Permit Fee Subic Bay Freeport Zone Registered Enterprises engaged in aviation and logistics activities or otherwise must pay a permit fee of Php25,000.00 per TEDFA. 6. Annual Monitoring of TEDFA On an annual basis, a year after the date of admission, locators must submit to SBMA/SBIA certified true copies of schedules of flight logs and total flight hours of all admitted TEDFA to establish compliance with herein rules and regulations, particularly the utilization of the SBFZ as the operations hub of TEDFA and that the TEDFA actually returns to the SBFZ after each flight. SBIA has the duty and responsibility to determine the locator's actual compliance with the rules and regulations herein. Non-compliance on the submission of the flight-logs shall be ground for suspension or cancellation of the CRTE privilege. AcICHD V. SALE, TRANSFER AND ASSIGNMENT OF TEDFA Locators not engaged in Maintenance, Repair and Overhaul (MRO) and aircraft trading business are prohibited from transferring ownership of TEDFA within three (3) years from admission. Locators primarily engaged in MRO and aircraft trading business may sell, transfer and assign TEDFA by notifying and securing clearances from SBMA. Subsequent transfer of ownership of TEDFA shall be subject to the following conditions: a. Prior to actual sale, transfer and assignment of TEDFA units, locators must first secure written approval from SBMA, which shall be effective for a thirty (30) day period. b. Locators should provide SBMA an original notarized copy of the document perfecting the ownership transfer as approved by SBMA, within fifteen (15) days from date of transaction. c. If vendee of locator's TEDFA, Engines, Parts and Accessories is not entitled to duty free privileges, or TEDFA, Engines, Parts and Accessories are removed or withdrawn from SBFZ, appropriate duties and taxes must be paid first to the Bureau of Customs (BOC) to effect transfer of ownership pursuant to Sec. 47(B) of RA 7227. If vendee is entitled to duty free incentives, vendee should first comply with the requirements listed in Item III. d. Payment of Php25,000.00 transfer fee. Any sale or assignment of any aircraft in violation of the foregoing conditions shall be subject to the payment of appropriate duties and taxes as provided in the amended Tariff and Customs Law. VI. FINES AND PENALTIES Offense Penalty Sale/transfer of aircraft units without SBMA approval Php250,000.00 and payment of duties and taxes if unit was sold to an entity not entitled to tax incentive privileges. This is without prejudice to Administrative and criminal charges that SBMA may opt to file as appropriate. Violation of CTE's Special Condition on Maintenance of active 'hub' presence in Subic. Php250,000.00 penalty and payment of duties and taxes to BOC. VII. EFFECTIVITY This Policy Guidelines shall take effect 15 days after the publication in a newspaper of general circulation. ROBERTO V. GARCIA Chairman & Administrator ADMINISTRATIVE ORDER NO. 1 (Series of 2016) Pursuant to Section 13 of Republic Act No. 7227 granting the Subic Bay Metropolitan Authority ("SBMA'), through the Subic Bay International Airport ('SBIA"), in part in paragraph (b)(3), the right to undertake and regulate the established, operation and maintenance of utilities, other services and infrastructure in the Subic Special Economic Zone, including airport operations, and to fix just and reasonable rates, fares, charges and other prices therefore; the following rental, fees and charges and corresponding rules and regulations pertinent thereto as prescribed in Administrative Order No. 1 (Series of 2001) are hereby revised, amended or modified accordingly. PART I DEFINITION OF TERMS Section 1. For the purpose of this Administrative Order, the terms used herein shall mean as follows: 1.1 Authority - The SBMA, through Subic Bay International Airport ("SBIA") 1.2 Airport - Generally, an area of land or water that is used or intended to be used for the landing and take-off of aircraft, and including its buildings and facilities of the SBMA as defined in Sec. 13 of RA 7227, paragraph (b)(1) to include among others, the SBIA Passenger and Cargo Terminals and appurtenant areas that are used or to be used for airport buildings, installations and facilities, other buildings and facilities right-of-way, aircraft movement areas and facilities located thereon. 1.3 Aircraft - Any contrivance used or designed for navigation or flight in the air. 1.4 Gross Weight of Aircraft - The aircraft certified maximum gross weight specified in the license of a particular aircraft granted by the licensing authority. 1.5 General Manager - The General Manager of the SBIA designated by the SBMA Chairman and Administrator and confirmed by the Board of Directors. 1.6 Helicopter - A rotocraft that, for its horizontal motion, depends principally on its engine-driven rotors. 1.7 Heliport - An area of land, water, or structure used or intended to be used for the landing and take-off of helicopters. 1.8 Transit Passenger - A passenger who arrives and departs from the airport at the same aircraft (passing through) from his original port of departure or in a connecting flight (changing aircraft) for continuing his journey provided that said passenger will no longer check-in in boarding his plane to his intended destination. 1.9 Nighttime - The time between 6:00 P.M. to 6:00 A.M. local time. PART II GENERAL PROVISIONS Section 1. APPLICABILITY. The fees and charges prescribed herein shall apply for the use of the SBIA, the facilities, services and properties under the management and control of the SBMA through the SBIA. TAIaHE Section 2. OTHER FEES AND CHARGES. The fees and charges prescribed herein shall not prejudice the levy and collection of such other fees and charges not covered herein subject to the provision of Section 13 of R.A. 7227. Section 3. EXEMPTIONS. Government agencies operating within the Airport shall pay rentals due including electric, water and telephone bills to the Authority for the use of office space and working area which they are currently occupying or may hereinafter occupy. However, government offices whose services are essential to the operations of the airport as determined by the SBMA Chairman and Administrator upon the recommendation of the SBIA General Manager thru the SBMA Administrator shall be exempted from the payment of rentals, electric and water bills only. Further, should these offices subsequently occupy additional spaces or areas, they shall pay the appropriate charges. Section 4. GUARANTEE OF PROMPT PAYMENT. To guarantee prompt payment of fees and charges covered by the contract lessees and concessionaires, excluding government agencies whose functions are essential in the operations of the airport and airlines, a deposit either in the form of Manager's check or cash shall be made with the SBMA Treasury Department the amount of which shall be equivalent to three (3) months rentals and Concessions Privilege Fee ("CPF"), one (1) month advance, Surety Bond from the GSIS or government accredited insurance or bonding company in the amount equivalent to total rentals and CPF during the term of the contract. These shall be maintained during the duration of the lease/concession, and in the case of default, shall be automatically applied lied to the back accounts. Section 5. RULES OF PAYMENT . The fees and charges prescribed herein shall be due and payable within five (5) days upon receipt of the billing for which the charges are due unless provided otherwise. Concessionaires billed on the basis of gross receipt shall be required to submit to the Authority a sworn statement of their gross receipts from operations for the period required and to maintain a separate books of account for the purpose which shall be subject to the periodic inspection of the Authority. Failure to submit the required statements shall be sufficient ground for termination of the contract, without prejudice to the collection of whatever amount is due the government including interest and penalties. Rates quoted in US dollars may be paid in Philippine Peso equivalent at the prevailing rate of exchange as of the date of billing. Section 6. RULES FOR NON-PAYMENT. Remedies for non-payment shall be as provided in the following explanation. Failure on the part of any person, firm or corporation to pay any fees or charges due and payable after a written demand by the SBMA Administrator or his duly authorized representatives, shall be considered sufficient ground to deny such person, firm or corporation of their use of any facilities, and/or airport services. Furthermore, should the lessees/concessionaires' cash deposit be insufficient to cover the outstanding obligations of such concessionaires, the SBMA may hold the lessees/concessionaires' properties within the leased premises or areas until full payment is made. This shall not prejudice the Authority from taking such other actions and/or proceedings as may be deemed proper and necessary. Unpaid accounts shall earn interest at the rate of two percent (02%) per month, compounded monthly to commence from the receipt of the letter of demand by the lessee or concessionaire. PART III AERONAUTICAL FEES AND CHARGES Aircraft that operate at the SBIA Complex shall be levied the appropriate fees and charges for the use of various facilities such as runways, taxiways, apron areas and lighting facilities. Section 1. LANDING AND TAKE-OFF FEES. Landing and take-off fees for International or domestic operations shall be computed as follows: 1.1 International Operations: Basis: Fees are computed based on the maximum take-off weight in Aircraft's Certification and per aircraft cycle (landing and take-off). CATEGORY RATES IN US DOLLARS ($) 1.1.1 Up to 50,000 kgs. $1.71/500 kgs. or a fraction thereof 1.1.2 From 50,001 to 100,000 kgs. $170.52 plus $2.14/500 kgs. or fraction thereof in excess of 50,000 kgs. 1.1.3 From 100,001 to 150,000 kgs and over $383.30 plus $2.14/500 kgs. Or fraction thereof in excess of 100,000 kgs. 1.2 Domestic Operations: Basis: Fees are computed based on a maximum take-off weight in Aircraft's Certification and per aircraft cycle (landing and take-off). CATEGORY RATES IN PESOS (Php) 1.2.1 Up to 50,000 kgs. P32.04/500 kgs. or a fraction thereof 1.2.2 From 50,001 to 100,000 kgs. P3,203.84 plus P39.98/500 kgs. or a fraction thereof in excess of 50,000 kgs. 1.2.3 From 100,001 to 150,000 kgs. and over P7,186.60 plus P39.98/500 kgs. or fraction thereof in excess of 100,000 kgs. Section 2. PARKING CHARGES. Parking charges including remote parking for International and Domestic Operations shall be computed as follows: 2.1 International Operations: Basis: Fees are computed based on the maximum take-off weight in aircraft's certification and the number of hours parked after the first two (2) hours free parking period. CATEGORY RATES IN US DOLLARS ($) 2.1.1 Up to 50,000 kgs. 1st half-hour $1.36. Each additional half hour thereafter or fraction thereof $1.36. 2.1.2 From 50,001 to 100,000 kgs. 1st half-hour $13.09. Each additional half-hour thereafter or fraction thereof $3.00 2.1.3 From 100,001 kgs. and over 1st half-hour $13.09. Each additional half-hour thereafter or fraction thereof $3.95 2.2 Domestic Operations: Basis: Fees are computed based on the maximum take-off weight in aircraft's certification and the number of hours parked after the first two (2) hours free parking period. cDHAES CATEGORY RATES IN PESOS (Php) 2.2.1 Up to 50,000 kgs. 1st half-hour P17.65. Each additional half-hour thereafter or fraction thereof P14.70. 2.2.2 From 50,001 to 100,000 kgs. 1st half-hour P169.02. Each additional half-hour thereafter or fraction thereof P39.68. 2.2.3 From 100,001 to 150,000 kgs. and over 1st half-hour P169.02. Each additional half-hour thereafter or fraction thereof P51.44. Section 3. LIGHTING CHARGES. Basis: Aircraft that lands, take-off or park during nighttime at the airport shall be levied additional lighting charges. Nighttime is between 6:00 P.M. to 6:00 A.M. CATEGORY RATES IN US DOLLARS ($) 3.1 Landing/take-off (International) $7.98 per landing and/or take-off 3.2 Landing/take-off (Domestic) P200.00 per landing and/or take-off 3.3 Parking Additional 10% of the rate for daytime parking Section 4. EXEMPTIONS. Basis: Unless otherwise specifically provided herein, the Aeronautical Fees and Charges shall not apply to the following: 4.1 Aircraft exclusively used by head of states and diplomatic and consular representatives of foreign government. (Civil registered aircrafts other than state-owned aircraft, which are chartered or hired by or for representatives or personnel of foreign governments are not exempted by this provision). 4.2 Aircraft engaged in non-commercial activities, mercy and humanitarian missions, or government-sponsored missions, subject to the approval of the SBMA Board of Directors upon the recommendation of the General Manager thru the SBMA Chairman and Administrator. 4.3 Aircraft which, by provisions of existing laws or treaties, are exempt from payment of fees and other charges. 4.4 Other aircraft that may be authorized by the SBMA Chairman and Administrator or his duly authorized representatives as exempt from said fees and charges; provided, however, that it is within the prescribed guidelines approved by the SBMA Chairman and Administrator. Section 5. PAYMENT PROCEDURES. The aeronautical fees and charges prescribed herein shall be due and payable through any of the following modes of payment. 5.1 As a general rule, payment of the aforementioned fees and charges shall be due and demandable from aircraft operators or commanders prior to the aircraft's take-off. Fees and charges quoted in US dollars may be paid in the Philippine currency (Peso) equivalent to the prevailing exchange rate as of the date of billing. The above fees and charges shall be paid either directly to the SBMA/SBIA or its authorized representatives. 5.2 Credit arrangements with the SBMA may be made in advance provided such operators post a cash bond equivalent to estimated three (3) month charge which shall be maintained by the airline to guarantee prompt payment of accounts and provided further, that such airlines do not have unsettled non-current accounts with the SBMA. 5.3 Failure on the part of the airlines or aircraft operators to pay accounts due shall be sufficient ground for SBMA to detain said aircraft or deny such aircraft for further use of the airport and its facilities. 5.4 Contracts for the use of the airport and airport facilities may be required from the airlines or aircraft operators where credit arrangements are approved. PART IV RENTALS Section 1. TERMINAL BUILDINGS. Rental of floor spaces at the terminal buildings and other airport buildings, shall be in accordance with the following rates: CATEGORY RATES IN U.S. DOLLARS ($) 1.1 Passenger Terminal Building $10.00/sq.m./month Section 2. USE OF VIP LOUNGE. A fee of P2,520.00/hour or a fraction thereof shall be imposed for the use of VIP Lounge with the exception of the following: 2.1 VIP Accommodation for 10 visitors P2,520.00/hour 2.2 Additional in excess of 20 visitors P126.00/visitor 2.3 VIP Assistance for the first 10 passengers P168.00/pax 2.4 Additional in excess of 10 passengers P84.00/pax Exemptions: a. Heads of State b. Members of the Senate and House of Representatives c. Cabinet Members and Justices of the Supreme Court d. Members of the Diplomatic Corps endorsed by the Protocol of the Department of Foreign Affairs e. Other local and foreign officials who may be extended courtesy usage by the SBMA Chairman and Administrator or his duly authorized representatives. Section 3. Use of Conference Room. 3.1 Capacity of 20-25 persons P500.00/hour with equipment P300.00/hour without equipment Section 4. OTHER AIRPORT BUILDINGS. Lease/rental charges for SBMA-owned building other than the passenger/cargo terminal buildings inclusive of the land area occupied by said buildings shall be charged the following minimum rates: ASEcHI CATEGORY RATES IN U.S. DOLLARS ($) 4.1 Hangars Based on SBMA approved appraisal rates 4.2 Open Space P136.27/sq.m./month Section 5. CHECK-IN AND CONCESSION COUNTERS. Rental charges for the use of the check-in and concession counters shall be in accordance with the following rates: TYPE OF FACILITY RATES 5.1 Check-in Counters, Weighing Scales, Conveyor and SOLARI over the counter signs $15.00/counter/hour or a fraction thereof for International P140.00/counter/hour or a fraction thereof for Domestic 5.2 Concession Counters $50.00/counter/month Section 6. FIXED RATES. Fixed rates for the lease/rental of space at the SBIA terminal buildings, hangars, offices, factories and other airport buildings shall be upon mutual consent of the SBMA, thru the SBMA Administrator of his duly authorized representatives, and the parties involved. PART V BUSINESS CONCESSIONS Section 1. CONCESSION PRIVILEGE FEES. All business conducted within the SBIA property shall be levied concession privilege fees. A concession privilege fee shall be charged for each type of business or commercial activity notwithstanding the use of the same space for other business purposes. A concession privilege fee shall also be charged businesses within the terminal buildings inclusive of businesses located within its vicinity. Concession privilege fees shall be separate from the charges or rentals of buildings, and/or land spaces and is payable in advance on a monthly, quarterly or yearly basis according to the following schedule: 1.1.1 Passenger Services Bank Foreign Exchange Dealer $250.00/quarter Travel Agency $250.00/quarter Commercial Cable/Telegraph $150.00/quarter Insurance Agency $150.00/quarter Pay Telephone Booth 15% of gross income Hotel Reservation $500.00/quarter 1.1.2 Food Service Concessions: Restaurants $500.00/quarter Kitchenette or Canteens $350.00/quarter Coffee Shop, Snack Bars and Refreshment Parlors $250.00/quarter Cake House/Pastry Stores $250.00/quarter Food Catering to Employees $100.00/quarter Cigars/Cigarettes and Confectioneries $150.00/quarter Liquor Store/Wine Stores $250.00/quarter Frozen Food Products $150.00/quarter Miscellaneous $150.00/quarter 1.1.3 Transportation Utility Concessions: Tourist Buses $125.00/unit/quarter Tourist Coasters $100.00/unit/quarter Public Utility Buses $10.00/unit/quarter Taxicabs $15.00/unit/quarter Jeepney (PUJ) $5.00/unit/quarter Car Rental/Limousine Service $50.00/unit/quarter Others $25.00/unit/quarter 1.1.4 Miscellaneous Business Concessions: Lobby Fee Concession Highest bid price but not less than the SBMA estimate. Parking Concession (IPT) Highest bid price but not less than the SBMA estimate. Porterage Service (IPT) Highest bid price but not less than the SBMA estimate. Private Cargo Terminal Operators 5% of Gross Income or US$5,000.00 per month whichever is higher. Photographic Supply and/or Service Store $150.00/quarter Beauty Shop/Barber Shop $100.00/quarter Vending Machines $50.00/unit/quarter Amusement Machines $150.00/unit/quarter Duty Free Shops 3% of Gross Sales Art Gallery $150.00/quarter Flower Shop $150.00/quarter Newspaper, Magazine and Periodical Stand $100.00/quarter Movie/TV Filming/Advertising P50,000.00 for 12 hours Additional P3,500.00/hour in excess of 12 hours Use of Apron P7,500.00/hour Use of Taxiway and Runway P15,000/hour Utility Charges at Passenger P2,500.00/hour -minimum Terminal Building P3,700.00/hour- one full chiller P7,800.00/hour- two full chiller Still Photography $100.00/3 hours or a fraction thereof Documentary $200.00/3 hours or a fraction thereof Shoe Cleaning Service $50.00/quarter Bookstore and Office Supplies $100.00/quarter Public Lockers or Luggage Deposit $1.00/locker/month Drugstore/Gift Shops/Curios & Novelty Stores $150.00/quarter Packing/Crating Services $150.00/quarter Miscellaneous $150.00/quarter 1.2 Other Areas (Not in Terminal Area) 50% discount on aforementioned Terminal Area Concession fees PART VI UTILITIES Section 1. ELECTRIC POWER CHARGES. Lessees/tenants of buildings and/or spaces shall be charged for their electrical consumption based on actual meter readings in accordance with SBMA rates plus fifteen percent (15%) maintenance and service fee. Section 2. WATER CHARGES. Lessees and/or tenants of buildings and/or spaces shall be charged for their water consumption based on the actual meter reading in accordance with SBMA rates plus fifteen percent (15%) maintenance and service fee. PART VII OTHER AIRPORT FEES AND CHARGES Section 1. CARGO TERMINAL FEE. A Cargo Terminal Fee shall be imposed on the signees of cargoes using the facilities at the SBIA. CATEGORY RATES 1.1 International Operation: 1.1.1 Incoming or Outgoing Cargoes 1.2 Domestic Operation: 1.2.1 Incoming or Outgoing Cargoes P0.10/kg. or fraction thereof Section 2. VEHICULAR PARKING FEES. A motor vehicle, regardless of type, shall be charged for the use of vehicular parking areas in accordance with the following rates: 2.1 Cars and Jeeps P10.00 for every vehicle, RON P100.00 for every vehicle. 2.2 Trucks, Buses Vans & Coasters P20.00 for every vehicle, RON P100.00 for every vehicle. Note: RON - Remain Overnight Section 3. GROUND HANDLING SERVICE FEES. A fee shall be charged for the use of the ramp facilities in accordance with the following schedule: TYPE OF GROUND HANDLING SERVICES FEE 3.1 Ground handling services at Terminal 5% of Gross Income 3.2 In-flight Catering Service 5% of Gross Income 3.3 Repair and Maintenance Service 5% of Gross Income Section 4. ADVERTISING FEES. Business in the form of signboards, displays, billboards, posters, streamers, etc., may be installed within the airport premises subject to the approval of the Airport Manager. Location of signboards of concessionaires within their respective leased premises are exempted from the payment of advertising charges provided that their size, design and location are approved by the SBMA Chairman/Administrator. The advertising rates are exclusive of electricity and other local utilities provided by SBMA management chargeable to the concessionaires. ITAaHc 4.1 Indoor Advertising at the Terminal Highest bid price but not less than the approved SBMA estimate. 4.2 Outdoor Advertising - Lighted Billboard or Displays US$5.00/sq.m./month - Unlighted Billboards US$2.50/sq.m./month - Circular, Posters US1.00/sq.m./month Section 5. ROYALTY FEE ON THE SALE OF AVIATION FUEL, OIL, GREASE AND LUBRICANTS. A royalty fee shall be imposed on any person, firm or corporation, selling directly or indirectly, aviation fuel, oil, grease or lubricants to any aircraft at the airport for their use. This royalty fee shall be as follows: 5.1 Aviation Fuel US$0.0040/U.S. Gallon 5.2 Oil US$0.015/U.S. Gallon 5.3 Grease US$0.015/pound Section 6. PIPE RENTALS. The charge for the pipeline rentals shall be a throughput fee of US$0.013/U.S. Gallon. Section 7. PASSENGER TERMINAL FEE. A passenger terminal fee shall be paid by each departing passenger in accordance with the following rates: 7.1 International Passenger P600.00 or US$ equivalent/pax. 7.2 Domestic Passenger P150.00 or US$ equivalent/pax. The above rates of passenger terminal fee shall be paid either directly to the authorized representatives of SBMA/SBIA, through the carrier or the ground handling agent of the carrier, and shall be exclusive of other charges being levied by the National Government. Any passenger who refuses or fails to pay the required passenger service charge shall be prevented from boarding the aircraft. Exemptions: a. Children two (2) years old and below; b. Transit Passenger; c. Pilgrims and others with authority from the Office of the President of the Philippines; d. Refugees; e. Extra-crew of the air carrier; and f. Other passengers who the SBMA Administrator or his duly authorized representatives deem exempt from the charges; provided, however, that it is within the prescribed guidelines approved by the SBMA Board of Directors. Section 8. MISCELLANEOUS FEES AND CHARGES. For the issuance or replacement of SBMA/SBIA access cards, and vehicle permit and other miscellaneous services shall be charged in accordance with the following rates: 8.1 Issuance of Passes Type of Pass Month Red Blue Green Yellow Annual Access Pass 12 1,200 900 600 350 Seasonal Pass 11 1,100 850 550 300 10 1,000 775 500 275 9 900 700 450 250 8 800 625 400 225 7 700 550 350 200 6 600 475 300 175 5 500 400 250 150 4 400 325 150 125 Temporary Pass 3 300 250 150 100 Sticker Pass 1 200 150 100 50 AMA Driver's Permit 12 300 500 AMA Vehicle Pass 12 500 Temporary Vehicle Pass 1 300 Red AMA, Perimeter Access Road, Ramp Area, Southeast, Boton, Southwest and Midway Apron, ATC, NAVAIDS/MET Blue PTB Pre-Departure Area, VIP Lounge, Check in Counter, Baggage Counter, Immigration Counter, Customs Counter, Security Office/PNP-ASG, Arrival, Exit/Lobby Green Landside Area, PTB Parking Area, Operations Center, Administration, Terminal, Maintenance, Ramp, Electronics/Electrical, PAGASA, CAAP, Medical, ALEB Yellow Concessionaires, Locators, Airline Office (Room/Bldg Assigned) 8.2 Reproduction of Official Records P5.00/page 8.3 Reproduction of Weather Satellite P150.00/page picture 8.4 Penalty for Lost Passes Type of Pass Initial Loss Second Loss Third Loss Fourth Loss Annual Access Pass, AMA Driver's Permit and AMA Vehicle Pass P500.00 P1,000.00 P2,000.00 Disqualification of holder from further issuance of SBIA Pass/OB Pass Temporary Pass, Temporary Vehicle Pass and Sticker Pass P100.00 P200.00 Disqualification of holder from further issuance of Temporary Pass Note: Loss of issued pass must be reported to the Office of the ID and Pass Control/SBIA Management. Replacement may be issued only upon payment of the corresponding penalty fee and the submission of supporting documents. CHTAIc 8.5 Penalty for Violation of SBIA Rules and Regulations on Pass 8.5.1 First Offense A warning will be issued 8.5.2 Second Offense P1,000.00 The issued pass will be confiscated and held for two weeks. 8.5.3 Third Offense The company/agency concerned will be requested to assign somebody in place of the offender and the latter will be banned from the said area or totally at the airport. Section 9. TACKING FEE. Aircraft using the various loading bridges at the SBIA shall be charged with the following fees: 9.1 Loading Bridge with Single Tube US$20.00/hour or a fraction thereof Section 10. AIRPORT RELATED SERVICES PROVIDED BY THIRD PARTY SERVICE PROVIDER, ON-AIRPORT LOCATOR. Collection of 15% SBMA Share on Gross Revenue Sales for Airport Related Services provided by any contractor, agent or vendor, including but not limited to the following: 10.1 Cargo Handling/Trucking/Hauling (Passenger or Cargo) Services 10.2 Wash-down/Cleaning Services (Military Motor Pool) 10.3 Telecommunication Services 10.4 Garbage Collection Services 10.5 Catering Services 10.6 Retailing 10.7 Utility Providers (Power/Standby Power and Water) 10.8 Other Airport Related Services Section 11. NON-AIRPORT ACTIVITY. 11.1 NOTAM Requests- Fireworks, Events P1,000.00/application 11.2 Aerodrome Closure- Event, Sky Jump all others P15,000.00/hour 11.3 Aircraft Follow Me P1,000.00/hour 11.4 Vehicle Escort P300.00/hour 11.5 Aircraft Marshalling 11.5.1 Domestic P300.00/aircraft 11.5.2 International P1,000.00/aircraft PART VIII PENALTY PROVISIONS SBMA through the SBIA shall implement the REMEDIES FOR NON-PAYMENT and FINE and PENALTIES as provided for in the aforementioned RA 7227. PART IX REPEALING PROVISIONS Administrative Order No. 1 (Series of 1995) or parts thereof as they pertain to Fees and Charges of airport areas, facilities and other service which are inconsistent with the provisions of this Administrative Order are hereby repealed, amended or modified accordingly. PART X SEPARABILITY PROVISIONS The provisions of this Administrative Order are hereby declared separable. If any portion thereof shall be held invalid or unconstitutional, such invalidity or unconstitutionality, shall not affect the other provisions which shall be in full force or effect. PART XI EFFECTIVITY This Administrative Order shall take effect fifteen (15) days after the last publication in the newspaper of general circulation. Roberto V. Garcia Chairman and Administrator