AUSTRALIA – PHILIPPINES AIR SERVICES DISCUSSIONS CANBERRA, 12-13 MARCH 2009

1. Delegations representing the aeronautical authorities of the
Government of Australia and the Government of the Republic of the
Philippines (Philippines) met iu Canberra on 12-13 March 2009 to discuss
air services arrangements between their two countries.

2. A list of the two delegations is at Attachment A. The discussions
were held in a friendly and cordial atmosphere and the following
understandings were reached.

APPLICATION

3. This Memorandum of Understanding (MOU) replaces the MOU of 11 October 10% and the MOU of 16 February 1994.

AIR SERVICES AGREEMENT

4. The delegations mutually decided to recommend the new draft Air
Services Agreement at Attachment B (the draft Agreement) to their
respective Governments for adoption, replacing the existing Agreement
between Australia and the Philippines relating to Air Services dated 15
November 1971.

5. The delegations further decided that the draft Agreement will be
given interim effect, on an administrative basis, until it enters into
force pursuant to Article 20 of the draft Agreement.

CAPACITY ENTITLEMENTS

Combination Passenger/Cargo Services

6. The delegations mutually determined that the following capacity
entitlements will apply for the operation of combination passenger/cargo
services in each direction on the routes specified in the Route
Schedule of the draft Agreement for the designated airline or airlines
of each Party:

7. For the designated airline(s) of the Philippines:

a) For services to (from Sydney, Melbourne (Tullamarine and Aval on). Brisbane and Perth:

With immediate effect, a total 4,000 seats each way each week.

An additional 1,000 seats each way each week (i.e. a total of 5,000
scats each wa> each week) after the designated airline(s) of either
Australia or the Philippines have received approval to operate a minimum
of 3.000 seats each way each week.

An additional 1,000 seats each way each week (i.e. a total of 6,000
seals each (each week) after the designated airline(s) of either
Australia or the Philippines have received approval to operate a minimum
of 4,000 scats each way each week.

b) For services to/from other international airports in Australia
Unrestricted capacity and frequency of services with any type of
aircraft.

8. For the designated airline(s) of Australia:

a) For services to/from Manila and Clark:

With immediate effect, a total 4,000 seats each way each week.

An additional 1,000 seats each way each week (i.e. a total of
5.000 seats each way each week) after the designated airline(s) of
either Australia or the Philippines have received approval to operate a
minimum of 3,000 seats each way each week.

An additional 1.000 seats each way each week (i.e. a total of
6,000 seats each way each week) after the designated airline(s) of
either Australia or Ihe Philippines have received approval to operate a
minimum of 4.000 seats each way each week.

b) For services to/from other international airports in the Philippines

Unrestricted capacity and frequency of services with any type of aircraft.

Dedicated Cargo Services

9. In operating dedicated cargo services between Australia and (he
Philippines, the designated airline(s) of Australia may operate from any
point in Australia io/from Manila and/or Clark, while the designated
airlines of the Philippines may operate from Manila and/or Clark to any
point in Australia. The designated airline(s) of each Party may operate a
total 300 tonnes each way each week to/from Manila and 1300 tonnes each
way each week to/from Clark with any type of aircraft.

TRAFFIC RIGHTS

Combination Passenger/Cargo Services

10. In operating combination passenger/cargo services, the designated
airluies(s) of each Party may not exercise traffic rights at any
intermediate and beyond points except that:

a) airlines of Australia may exercise full fifth freedom traffic
rights at the intermediate point of Port Moresby and one additional
point to be nominated, provided that point is not in Singapore or the
United States;

b) airlines of the Philippines may exercise full fifth freedom
traffic rights at any one intermediate point to be nominated, provided
that point is not in Singapore or the United States;

c) airlines of Australia may exercise full fifth freedom traffic
rights between the Philippines and points beyond the Philippines in Hong
Kong. Japan. India- Bahrain. Iran, Greece, Austria, France, the
United Kingdom, plus two other additional points to be nominated,
provided that those points arc not in the United States. Canada or
China;

(i) capacity of services operating beyond the Philippines to Japan may not exceed 2500 seats each way each week; and

d) airlines of the Philippines may exercise full fifth freedom
traffic rights between Australia and one point beyond Australia in New
Zealand only.

11. Intermediate and beyond points are to be nominated in writing by
the aeronautical authorities and may be changed from time to time.

12. The designated airline(s) of each Party will not be entitled to
uplift traffic at one point in the territory of the other Party for
discharge at another point in the territory of that same Party, with the
exception that the designated airlines(s) of each Part> may exercise
own stopover/co-terminal rights between points in the other Party.

Dedicated Cargo Services

13. In operating dedicated cargo services between Australia and the
Philippines, the designated airlines of both Parties may only exercise
third and fourth freedom traffic rights.

DATE OF EFFECT

The above understandings will have operational effect from the date of signature of this Memorandum of 1 Inderslandinu.

Signed in Canberra on the thirteenth day of March 2009.

(Sgd.) MR. IAIN LUMSDEN	(Sgd.) UNDERSECRETARY DOROTEO A. REYEZ II
For the aeronautical authorities of the Government of Australia	For the aeronautical authorities of the Republic of the Philippines

Attachment A

AUSTRALIA – PHILIPPINES AIR SERVICES TALKS

CANBERRA, 12-13 March 2009

Australian Delegation

Mr. Iain Luinsden (Leader)
Director, Bilateral Aviation
Aviation and Aiiports Division
Department of Infrastructure. Transport, Regional Development and Local Government

Mr Brenion Clark
Assistant Director, Bilateral Aviation
Department of Infrastructure, Transport, Regional Development and Local Government

Mr Wayne Kelly
Assistant Director. Bilateral Aviation
Department of Infrastructure, Transport. Regional Development and Local Government

Ms Alicia Tong
Bilateral Aviation
Department of Infrastructure. Transport. Regional Development and Local Government

Mr Max Whitby
Senior Policy Analyst
Tourism Division
Department of Resources, Energy and Tourism

Ms Rebecca Haining
Manager
Government and International Relations
Qantas Airways

Observers

Mr Paul Harrington
Transport Services Trade Officer
International Aviation Industry Policy
Department of Infrastructure. Transport. Regional Development and Local Government

Mr Christian Bayer-Kovesi
Senior Policy Officer
Tourism Division
Department of Resources. Energy and Tourism

AUSTRALIA – PHILIPPINES AIR SERVICES TALKS

CANBERRA, 12-13 March 2009

Philippines Delegation

Chairman

Undersecretary Doroteo A. Reyes II
Department of Transportation and Communications

Vice Chairman

Undersecretary Franklin M. Ebdalin
Department of Foreign Affairs

Members

Executive Director Carmelo L. Arcilla
Civil Aeronautics Board

Director Evelyn R. Cajigal
Department of Tourism

Mr Victor Jose I. Luciano
Clark International Airport Corporation

Any. Roberto CO. Lim
Philippine Airlines Inc

Ms Ma. Socorro R. Gonzaga
Philippine Airlines Inc

Ms. Ma. Inez Antonia F. Jose
Cebu Pacific Air

Mr Reynaldo L. Rodriguez
Zest AirwaYs

Advisers

Atty. Raquel T. Desiderio
Department of Transportation and Communications

Ms Ma. Cristina P. Calara
Civil Aeronautics Board

Atty Anna Marie P. de Vera
Department of Foreign Affairs

Atty Rcvnaldo L. Ching
Department of Tourism

Mr Jose Enrique L. Perez de Tagle
Philippine Airlines Inc

Atty Enrique J. Esquivel
Philippine Airlines Inc

Atty Patcrno S. Manlaring. Jr.
Cebu Pacific Air

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AND THE GOVERNMENT OF AUSTRALIA RELATING TO AIR SERVICES

The Government of the Republic of the Philippines and the Government of Australia (hereinafter, “the Parties”);

Being parties to the Convention on International Civil Aviation, opened for signature at Chicago on December 7. 1944;

Desiring to promote an international aviation system based on
competition among airlines in the marketplace and wishing to encourage
airlines to develop and implement innovative and competitive services;

Desiring to ensure the highest degree of safety and security in
international air transport and reaffirming their grave concern about
acts or threats against the security of aircraft, which jeopardise Ihc
safety of persons or property, adversely affect the operation of air
transport, and undermine public confidence in the safety of civil
aviation.

ARTICLE 1
DEFINITIONS

For the purpose of this Agreement, unless otherwise stated, the term:

(a) “aeronautical authorities” means for each Party the authority
or authorities as notified in writing from time to time by one Party to
the other Party;

(b) “agreed services” means services for the uplift and discharge of traffic as defined in Article 3, subparagraph 1 (c);

(c) “agreement” means this Agreement, its Annexes, and any amendments thereto;

(d) “air transportation” means the public carriage by aircraft of
passengers, baggage, cargo, and mail, separately or in combination, for
remuneration or hire;

(e) “airline'” means any air transport enterprise marketing or operating air transportation;

(f) “capacity” is the amount(s) of services provided under the
Agreement, usually measured in the number of flights (frequencies), or
seats or tonnes of cargo offered in a market (city pair, or country
-to-country) or on a route during a specific period, such as daily,
weekly, seasonally or annually;

(g) “Convention” means the Convention on International Civil
Aviation, opened for signature at Chicago on 7 December 1944. and
includes:

(i) any Annex or any amendment thereto adopted under Article 90
of the Convention, insofar as such Annex or amendment is at any given
time in force for both Parties; and

(ii) any amendment which has entered into force under Article 941a) of the Convention and has been ratified by both Parties:

(h) “designated airline” means an airline or airlines designated
and authorised in accordance with Article 2 (Designation, Authorisation
and Revocation) of this Agreement;

(i) “ground-handling” includes but is not limited to passenger,
cargo and baggage ” handling, and the provision of catering facilities
and/or services:

(j) “1CAO” means the International Civil Aviation Organization;

(k) “‘international air transportation” means air
transportation which passes through the air space over the territory
of more than one State:

(1) “marketing airline” means an airline that offers air
transportation on an aircraft operated by another airline, through
code-sharing;

(m) “operating airline” means an airline that operates an aircraft
in order to provide air transportation – it may own or lease the
aircraft;

(n) “slots'” means the right to schedule an aircraft movement at an airport:

(o) “”stop for non-traffic purposes'” has the meaning assigned to it in Article 96 of the Convention:

(p) “tariffs” means any price, fare, rate or charge for the
carriage of passengers (and their baggage) and/or cargo (excluding mail)
in international air transportation, including transportation on an
intra-or interline basis, charged by airlines, including their agents,
and the conditions governing the availability of such price, fare, rate
or charge;

(q) “territory” in respect of the Philippines, means the territory
as defined in Article 1 of 1987 Constitution of the Republic of the
Philippines, and in respect of Australia, has the meaning assigned to it
in Article 2 of the Convention;” and

(r) “user charges” means a charge made to airlines by a service
provider for the provision of airport, airport environmental, air
navigation and aviation security facilities and services.

ARTICLE 2
DESIGNATION, AUTHORISATION AND REVOCATION 

1 Each Party shall have the right to designate as many airlines as
it wishes to conduct international air transportation in accordance with
this Agreement, and to withdraw or alter such designations. Such
designations shall be transmitted to the other Party in writing through
diplomatic channels. Designation shall not be required Tor airlines
exercising the rights provided for in Article 2 subparagraphs (a) and 1
(b).

2, On receipt of such a designation, and of applications from a
designated airline, in the form and manner prescribed for operating
authorisations and technical permissions relating to the operation and
navigation of the aircraft, the other Party shall grant
appropriate authorisations without delay. provided
that:

(a) substantial ownership and effective control of the airline is
vested in the Party designating the airline, nationals of that Party, or
both;

(b) the airline is qualified to meet the conditions prescribed
under the laws, regulations and rules normally and reasonably applied to
the operation of international air transportation by the Party
considering the application or applications, in conformity with the
provisions of the Convention;

(c) the airline holds the necessary operating permits: and

(d) the Party designating the airline is maintaining and
administering the standards set forth in Article 6 (Safety) and Article 7
(Aviation Security) of this Agreement.

3. When an airline has been so designated and authorised it may
commence international air transportation, provided that the airline
complies with the applicable provisions of this Agreement.

4. Either Party may withhold, revoke, suspend or limit the operating
authorisations or technical permissions of an airline designated by the
other Party, at any time, if the conditions specified in paragraph 2 of
this Article arc not met or if the airline otherwise fails to operate in
accordance with the conditions prescribed under this Agreement.

5. Unless immediate action is essential to prevent further
non-compliance with subparagraphs 2 (b) to 2 (d) of this Article, the
rights established by paragraph 4 of this Article shall be exercised
only after consultation with the other Party.

6. This Article does not limit the rights of either Party lo
withhold. revoke, limit or impose conditions on the operating
authorisation or technical permission of an airline or airlines of the
other Party in accordance with the provisions of Article 6 (Safety) or
Article 7 (Aviation Security) of this Agreement.

ARTICLE 3
GRANT OF RIGHTS

1 Each Party grants to the other Party the following rights for the
conduct of international air transportation by the airlines of the other
Party:

(a) the right to fly across its territory without landing;

(b) the right to make stops in its territory for non-traffic purposes;

(c) the rights for designated airlines, to operate services on the
route specified in Annex 1 and to make stops in its territory for the
purpose of taking on board and discharging passengers, cargo and mail,
hereinafter called the “agreed services”; and

(d) the rights otherwise specified in this Agreement.

2. Nothing in this Article shall be deemed to confer on the airline
or airlines of one Party the rights to uplift and discharge between
points in the territory of the other Party, passengers, their baggage,
cargo, or mail can”ied for compensation.

3. The provisions of this Agreement shall also be applicable to non-
scheduied international air transportation performed by the airlines of
each Party. including airlines not designated under Article 2. except
with respect to the following: Article 2, Article 3 sub-paragraph 1 (c).
Article 11, Article 12 and Annex 1.

ARTICLE 4
APPLICATION OF LAWS

1. While entering, within, or leaving the territory of one Party, its
laws. regulations and rules relating to the operation and navigation of
aircraft shall be complied with by the other Party’s airlines.

2. While entering, within, or leaving the territory of one Party, its
laws, regulations and rules relating to the admission to or departure
from its territory of passengers, crew, cargo and aircraft (including
regulations and rules relating to entry, clearance, aviation security,
immigration, passports, advance passenger information. customs and
quarantine or. in the case of mail, postal regulations) shall apply to
such passengers and crew and in relation to such cargo of the other
Party’s airlines.

3. Neither Party shall give preference to its own or any oilier
airline over an airline of the other Party engaged in similar
international air transportation in the application of its entry,
clearance, aviation security, immigration, passports, advance passenger
information, customs and quarantine, postal and similar regulations.

4. Passengers, baggage and cargo in direct transit through the
territory of cither Party and. not leaving the area of the airport
reserved for such purpose may be subject to examination in respect of
aviation security, narcotics control and immigration requirements, or in
other special cases where such examination is required having regard to
the laws and regulations of the relevant Party and to the particular
circumstances. Baggage and cargo in direct transit shall be exempt front
customs duties and other similar taxes.

ARTICLE 5
RECOGNITION OF CERTIFICATES

1. Certificates ot airworthiness, certificates of competency and
licences issued or rendered valid by one Party and still in force shall
be recognised as valid by the other Party for the purpose of operating
the agreed services provided that the requirements under which such
certificates and licences were issued or rendered valid are equal to or
above the minimum standards which may be established pursuant to the
Convention

2. If the privileges or conditions of the licences or certificates
referred to in paragraph 1 above, issued by the aeronautical authorities
of one Party to any person or designated airline or in respect of an
aircraft used in the operation of the agreed services, should permit a
difference from the minimum standards established under the Convention,
and which difference has been filed with the International Civil
Aviation Organization, the other Party may request consultations
between the aeronautical authorities with a view to clarifying the
practice in question.

3. Each Party reserves the right, however, to refuse to recognise for
the purpose of alights above or landing within its own territory,
certificates of competency and licenses granted to its own nationals or
in relation to its registered aircraft by the other Party.

ARTICLE 6
SAFETY

1. Each Party may request consultations at any time concerning the
safety standards maintained by the other Party in areas relating to
aeronautical facilities, flight crew, aircraft and the operation of
aircraft. Such consultations shall take place within thirty days of that
request.

2. If, following such consultations, one Party finds that the other
Party does not effectively maintain and administer safety standards in
any such area that are at least equal to the minimum standards
established at that time pursuant to the Convention, the first Party
shall notify the other Party of those findings and the steps considered
necessary to conform with those minimum standards and that other Party
shall then take appropriate corrective action. Failure by the other
Party to take appropriate action within 15 days or such longer period as
may be agreed, shall be grounds for the application of Article 2 of
this Agreement (“Designation Authorisation and Revocation).

3. Paragraphs 4 to 7 of this Article supplement paragraphs 1 to 2 of
this Article and the obligations of the parties under Article 33 of the
Convention.

4. Pursuant to Article 16 of the Convention, it is further agreed
that, any aircraft operated by or. under a lease arrangement, on behalf
of an airline or airlines of one Party, on services to or from the
territory of another Party may. while within the territory of the other
Party, be made the subject of a search by the authorised representatives
of the other Party, on board and around the aircraft to check both the
validity of the aircraft documents and those of its crew and the
apparent condition of the aircraft and its equipment (in this Article
called “ramp inspection”), provided this does not lead to unreasonable
delay.

5. If any such ramp inspection or series of ramp inspections gives rise to:

a) serious concerns that an aircraft or the operation of an
aircraft does not comply with the minimum standards established at that
time pursuant to the Convention, or

b) serious concerns that there is a lack of effective maintenance
and administration of safety standards established at that time pursuant
to the Convention.

The Party carrying out the inspection shall, for the purposes oi
Article 33 of the Convention, be free to conclude that the requirements
under which the certificate or licences in respect of that aircraft or
in respeel of the crew of that aircraft had been isstied or rendered
valid, or that the requirements under which that aircraft is operated,
arc not equal to or above the minimum standards established pursuant to
the Convention.

6. In the event that access for the purpose of undertaking a vamp
inspection of an aircraft operated by or on behalf of the airline or
airlines of one Party in accordance with paragraph 3 above is denied by
the representative of that airline or airlines, other Party shall be
free to infer that serious concerns of the type referred to in paragraph
4 above arise and draw the conclusions referred to in that paragraph.

7. Each Party reserves the right to suspend or vary the operating
authorisation of an airline or airlines of the other party immediately
in the event the first Party concludes, whether as a result of a ramp
inspection, a series of ramp inspections, a denial of access for ramp
inspection, consultation or otherwise, that immediate action is
essential to the safety of an airline operation.

8. Any action by one Party in accordance with paragraphs 2 or 6 above
shall be discontinued once the basis for the taking of that action
ceases to exist.

ARTICLE 7
AVIATION SECURITY

1. Consistent with their rights and obligations under international
law. the Parties reaffirm that their obligation to each other to protect
the security of civil aviation against acts of unlawful interference
forms an integral part of this Agreement. Without limiting the
generality of their rights and obligations under international law, the
Parties shall in particular act in conformity with the provisions of the
Convention on Offences and Certain Other Acts Committed on Board
Aircraft, signed at Tokyo on 14 September 1963, the Convention for the
Suppression of Unlawful Seizure of Aircraft, signed at The Hague on 16
December 1971 and the Convention for the Suppression of Unlawful Acts
against the Safety of Civil Aviation. signed at Montreal on 23 September
1971, its Supplementary Protocol for the Suppression of Unlawful Acts
of Violence at Airports Serving International Civil Aviation, signed at
Montreal on 24 February 1988. as well as with any other convention and
protocol relating to the security of civil aviation which both Parties
adhere to.

2. The Parties shall provide upon request all necessary assistance to
each other to prevent acts of unlawful seizure of civil aircraft and
other unlawful acts against the safety of such aircraft, their
passengers and crew, airports and air navigation facilities, and any
other threat to security of civil aviation.

3. The Parties shall, in their mutual relations, act in conformity
with the aviation security provisions established by ICAO and designated
as Annexes to the Convention; they shall require that operators of
aircraft of their registry or operators of aircraft who have their
principal place of business or permanent residence in their territory
and the operators of airports in their territory act in conformity with
such aviation security provisions. Each Party shall advise the other
Party of any difference between its national regulations and practices
and the aviation security standards of the Annexes. Either Party may
request consultations with the other Party at any lime to discuss any
such differences.

4. Such operators of aircraft may be required to observe the aviation
security provisions referred (o in paragraph 3 above required by the
other Party for entry into, departure from, or while within the
territory of that other Party. Each Party shall ensure that adequate
measures are effectively applied within its territory to protect the
aircraft and to inspect passengers, crew, carry-on items, baggage, cargo
and aircraft stores prior to and during boarding or loading. Each Party
shall also give positive consideration to any request from the other
Party for reasonable special security measures to meet a particular
threat.

5. When an incident or threat of an incident of unlawful seizure of
civil aircraft or other unlawful acts against the safety of such
aircraft, their passengers and crew, airports or air navigation
facilities occurs, the Parties shall assist each other by facilitating
communications and other appropriate measures intended to terminate
rapidly and safely such incident or threat thereof.

6. Each Party shall have the right, within sixty (60) days following
notice (or such shorter period as may be agreed between the aeronautical
authorities), for its aeronautical authorities to conduct an assessment
in the territory of the other Party of the security measures being
earned out, or planned to be carried oiu. by aircraft operators in
respect of flights arriving from, or departing to the territory of the
ilrsi Party. The administrative arrangements for like conduct of such
assessments shall be mutually determined by the aeronautical authorities
and implemented without delay so as to ensure that assessments will be
conducted expeditiously.

7. When a Party has reasonable grounds to believe that the other
Party has departed from the provisions of this Article, the first Party
may request immediate consultations. Such consultations shall start
within fifteen (15) days of receipt of such a request from either Party.
Failure to reach a satisfactory agreement within fifteen (15) days
from the start of consultations or such other period as may be agreed
upon between the parties shall constitute grounds for withholding,
revoking, suspending or imposing conditions on the authorisations of the
airline or airlines designated by the other Party. When justified by
an emergency, or to prevent further non-compliance with the provisions
of this Article, the first Party may take interim action at any time.
Any action taken in accordance with this paragraph shall be discontinued
upon compliance by the other Part with the security provisions of this
Article.

ARTICLE 8
USER CHARGES

1. Each Party shall use its best efforts to encourage those
responsible for the provision of airport, airport environmental, air
navigation, and aviation security facilities and services to levy
charges on the airlines only on the basis that they are reasonable,
non-discriminatory, and equitably apportioned amongst categories other
user.

2. Reasonable charges reflect, but do not exceed, the full cost to
the competent charging authorities of providing the facilities and
services. This may include a reasonable return on assets, after
depreciation. Facilities and services tor which charges are made should
be provided on an efficient and economic basis. For charges to be non
discriminatory, they should be levied on foreign airlines at a rate no
higher than the rate imposed on a Party’s own airlines operating similar
international services.

3. The Parties shall encourage the exchange of such information
between the competent charging authorities and the airlines as may be
necessary to permit a full assessment of the reasonableness of,
justification for and apportionment of the charges in accordance with
paragraphs 1-2 of this Article.

4. Increased or new charges should only follow adequate consultations
between the competent charging authorities and the airlines.
Reasonable notice of any proposals for changes in user charges should be
given to users to enable them to r, express their views before changes
are made.

ARTICLE 9
STATISTICS

1. The aeronautical authorities of one Party may require a designated
airline of the other Party to provide statements of statistics related
to the traffic carried by that airline on services performed under this
Agreement.

2. The aeronautical authorities of each Party may determine the
nature of the statistics required to be provided by designated airlines
under the above paragraph, and shall apply these requirements on a
non-discriminatory basis.

ARTICLE 10
CUSTOMS DUTIES AND OTHER CHARGES

1. Aircraft operated in international air transportation by the
airlines of each Party shall be exempt from all import restrictions,
customs duties, excise taxes. and similar fees and charges imposed by
national authorities. Component parts, normal aircraft equipment and
other items intended for or used solely in connection with the operation
or for the repair, maintenance and servicing of such aircraft shall be
similarly exempt, provided such equipment and items are for use on board
an aircraft and are re-exported.

2. (a) Provided in each case that they are for use on board an
aircraft in connection with the establishment or maintenance of
international air transportation by the airline concerned, the following
items shall be exempt from all import restrictions, customs duties,
excise taxes, and similar fees and charges imposed by national
authorities, whether they are introduced by an airline of one Party into
the territory of the other Party or supplied to an airline of one Party
in the territory of the other Party:

(i) aircraft stores (including but not limited lo such items as
food, beverages and products destined for sale to or use by. passengers
during flight):

(ii) fuel, lubricants (including hydraulic Quids) and consumable technical supplies; and

(iii) spare parts including engines.

(b) These exemptions shall apply even when these items are to be used
on any part of a journey performed over the territory of the other
Party in which they have been taken on board.

3. The exemptions provided by this Article shall not extend to
charges based on the cost of services provided to the airlines of a
Party in the territory of the other Party.

4. The normal aircraft equipment, as well as spare parts (including
engines), supplies of fuel, lubricating oils (including hydraulic
fluids) and lubricants and other items mentioned in paragraphs 1 and 2
of this Article retained on board the aircraft operated by the airlines
of one Party ma}’ be unloaded in the territory of the other Party only
with the approval of the Customs authorities of that territory. Aircraft
stores intended for use on the airlines’ services may. in any case be
unloaded. Equipment and supplies referred to in paragraphs 1 and 2 of
this Article may be required to be kept under the supervision or control
of the appropriate authorities until they are re-exported or otherwise
disposed of in accordance with the Customs laws and procedures of that
Part.

5. The exemptions provided for by this Article shall also be
available in situations where the airline or airlines of one Party have
entered into arrangements with another airline or airlines for the loan
OT transfer in the territory of the other Party of the items specified
in paragraphs 1 and 2 of this Article, provided such other airline or
airlines similarly enjoy such reliefs from such other Party.

ARTICLE 11
TARIFFS

1. Each Party shall allow each airline to determine its own tariffs for the transportation of traffic.

2. Unless required by national laws and regulations, tariffs charged
by airlines shall not be required to be filed with the aeronautical
authorities of either Party.

3. In the event that either aeronautical authority is dissatisfied
with a tariff proposed or in effect for an airline of the other Party,
the aeronautical authorities will endeavour to seltle the matter through
consultations, if so requested by either authority.

ARTICLE 12
CAPACITY

1. The designated airlines of each Party shall enjoy fair and equal
opportunities to operate the agreed services hi accordance with this
Agreement.

2. In the operation of the agreed services, the capacity which may be
provided by the designated airlines of each Party shall be such as is
decided between the aeronautical authorities of the Parties before the
commencement of such services. bv the airlines concerned and from time
to time thereafter.

ARTICLE 13
COMMERCIAL OPPORTUNITIES

1. The airlines of each Party shall have the following rights in the territory of the other Party:

(a) the right to establish offices, including offline offices, for the promotion, sale and management of air transportation;

(b) the right to engage in the sale and marketing of air
transportation to any person directly and, at its discretion, through
its agents or intermediaries, using its own transportation documents;
and

(c) the right to use the services and personnel of any
organisation, company or airline operating in the territory of the other
Party.

2. hi accordance with the laws and regulations relating to entry,
residence and employment of the other Party, the airlines of each Party
shall be entitled to bring in and maintain in the territory of the other
Party those of their own managerial, sales, technical, operational and
other specialist staff which the airline reasonably considers necessary
for the provision of air transportation. Consistent with such laws and
regulations, each Party shall with the minimum of delay, grant the
necessary employment authorisations, visas or other similar documents to
the representatives and staff referred to in this paragraph.

3. The airlines of each Party shall have the right to sell air
transportation, and any person shall be free to purchase such
transportation, in local or freely convertible currencies. Each airline
shall have the right to convert their funds into any freely convertible
currency and to transfer them from the territory of the other Part, at
will. Subject to the national laws and regulations and policy of the
other Party, conversion and transfer of funds obtained in the ordinary
course of their operations shall be permitted at the foreign exchange
market rates for payments prevailing at the time of submission of the
requests for conversion or transfer and shall not be subject to any
charges except normal service charges levied for such transactions.

4. The airlines of each Party shall have the right at their
discretion to pay for local expenses, including purchases of fuel, in
the territory of the other Party in local currency or provided this
accords with local currency regulations, in freely convertible
currencies.

5. (a) In operating or holding out international air transportation
the airlines of each Party shall have the right, over all or any part of
their route in Annex 1 to enter into code share, blocked space or other
cooperative marketing arrangements, as the marketing and/or operating
airline, with any airline of the other Party. Subject to 5 (c) ot this
Article, the airlines participating in such arrangements must hold the
appropriate authority or authorities to conduct international air
transportation on the routes or segments concerned.

(b) Unless otherwise mutually determined by the aeronautical
authorities of the Parties, the volume of capacity or service
frequencies which may be held out and sold by the airlines of each
Party, when code sharing as the marketing airline. shall not be subject
to limitations under this Agreement.

(c) The airlines of each Party may market code share services on
domestic flights operated within the territory of the other Party
provided that such services form pan of a through international journey.

(d) The airlines of each Party shall, when holding out international
air transportation for sale, make it clear to the purchaser at the point
of sale which airline will be the operating airline on each sector of
the journey and with which airline of airlines the purchaser is entering
into a contractual relationship.

6. The airlines of each Party shall have the right to perform their
own ground-handling in the territory of the other Party, or contract
with a competing agent of their choice, including any other airlines
which perform ground-handling, lor such services in whole or in part.
Each airline shall also have the right, in the territory of the other
Parly, to offer its services as a ground-handling agent, in whole or
part, to any other airline. These rights shall be subject only to
restrictions resulting from considerations of airport safety. Where
such considerations preclude an airline from performing its own
ground-handling or contracting with an agent of its choice for
ground-handling services, these services shall be made available to that
airline on a basis of equality with all other airlines.

7. (a) The airlines of each party may use an aircraft on the agreed
services other than one owned by it only under the following conditions :

(i) that such arrangements will not be equivalent to giving the
lessor airline access to traffic rights not otherwise available to that
airline;

(ii) that the financial benefit to be obtained by the lessor
airline through such arrangements will not be related to the financial
success of the operation of the designated airline concerned:

(iii) that the agreed services by the designated airline using the
leased aircraft will not be linked so as lo provide through services by
the same aircraft to or from the services of the lessor airline on its
own route or routes;

(iv) that the standard of continued airworthiness and the adequacy
of operating and maintenance standards and insurance cover of any leased
aircraft operation by an airline designated by one side have to satisfy
all reasonable requirements imposed from time to time by the
aeronautical authorities of the other side: and

(v) that the responsibility for the matters referred to in
paragraph (d) above will be established to the satisfaction of the
aeronautical authorities of both sides.

(b) A designated airline may be required to give not less than 60
days’ written notification to the aeronautical authorities of the other
side of any leasing of aircraft together with the terms of such
arrangements and other relevant information. and obtain prior approval
of the said authorities before using any leased aircraft. Approval will
be given by the said authorities provided that notification was duly
given under this paragraph and the lease arrangement in question
satisfies all the conditions listed in paragraph 1 above.

(c) Furthermore, where the leasing of aircraft becomes necessary for
emergency reasons and the lease does not exceed 90 days, approval will
not be withheld by the aeronautical authorities of the other side solely
for the reason that less than 60 days” notice was given, so long as
reasonable prior notification was given to the said authorities.

8. The Parties recognise that to give effect to the rights and
entitlements embodied in the Agreement the airlines of each Party must
have the opportunity to access airports in the territory of the other
Party on a non-discriminatory basis.

9. In respect of the allocation and grant of time slots (slots) to airlines at their national airports, each Party will:

(a) in accordance with local slot allocation rules, procedures or
practices which are in effect or otherwise permitted, ensure that the
airlines of the other Party:

(i) are permitted fair and equal opportunity to secure slots: and

(ii) are afforded no less favourable treatment than any other airline in securing slots; and

(b) ensure that in the event of any arrangement, procedure or
practice which is either established with any third party in relation to
the grant of slots to the airlines of that, party or is otherwise
permitted Tor a particular foreign international airline or airlines,
such opportunities are extended to the airlines of the other Party.

10. The terms of paragraph 9 of this Article will be subject to the
provisions of any laws or regulations introduced by the Parties tor the
allocation of A slots at their national airports.

ARTICLE 14
COMPETITION

1. The competition laws of each Party, as amended from time to time,
shall apply to the operation of the airlines within the jurisdiction of
the respective Party. Where permitted under those laws, a Party or its
competition authority may. however, unilaterally exempt commercial
agreements between airlines from the application of its domestic
competition law. This does not obligate a Party or its competition
authority to provide a reciprocal exemption.

2. Without limiting the application of competition and consumer law
by either Party, if the aeronautical authorities of either Parly
consider that the airlines of either Party are being subjected to
discrimination or unfair practices in the territory of either Party,
they may give notice to this effect to the aeronautical authorities of
the other Party. Consultations between the aeronautical authorities
shall be entered into as soon as possible after notice is given unless
the first Party is satisfied that the matter has been resolved in the
meantime.

3. In undertaking the consultations outlined in this Article the Parties shall:

(a) coordinate their actions with the relevant authorities;

(b) consider alternative means which might also achieve the
objectives of action consistent with general competition and consumer
law: and

(c) take into account the views of the other Party and the other Party’s obligations under other international agreements.

4. Notwithstanding anything in paragraphs 1 to 3 above, this Article
does not preclude unilateral action by the airlines’ or the competition
authorities of either Party.

ARTICLE 15
CONSULTATIONS

1. Either Party may at any time request consultations on the
implementation, interpretation, application or amendment of this
Agreement.

2. Subject to Articles 2 (Designation, Authorisation and Revocation),
5 (Safety) and 6 (Aviation Security), such consultations, which may be
through discussion or correspondence, shall begin within a period of
sixty (60) days of the date of receipt of such a request, unless
otherwise mutually decided.

ARTICLE 16
AMENDMENT OF AGREEMENT

1. This Agreement may be amended or revised by agreement in writing between the Parties.

2. Any such amendment or revision shall enter into force when the
Parties have notified each other in writing that their respective
requirements for the entry into force of an amendment or revision have
been met.

3. If a multilateral convention concerning air transportation comes
into force in respect of both Parties, this Agreement shall be deemed to
be amended so far as is necessary to conform with the provisions of
that convention.

ARTICLE 17
SETTLEMENT OF DISPUTES

1. Any dispute between the Parties concerning the interpretation or
application of this Agreement, with the exception of any dispute
concerning tariffs or the application of national competition laws,
which camiot be settled by consultations or negotiations, or, where
agreed, by mediation in accordance with Annex 2. shall, ai me request of
either Party, be submitted to an arbitral tribunal.

2. Within a period of thirty (30) days from the date of receipt by
either Party from the other Party of a note through the diplomatic
channel requesting arbitration of the dispute by a tribunal, each Party
shall nominate an arbitrator. Within a period of thirty (30) days from
the appointment of the arbitrator last appointed, the two arbitrators
shall appoint a president who shall be a national of a third State. If
within thirty (30) days after one of the Parties has nominated its
arbitrator, the other Party has not nominated its own or. if within
thirty(30) days following the nomination of the second arbitrator, both
arbitrators have not agreed on the appointment of the president either
Party may request the President of (he Council of the International
Civil Aviation Organization to appoint an arbitrator or arbitrators as
the case requires. If the President of the Council is of the same
nationality as one of the Parties, the most senior Vice President who is
not disqualified on that ground shall make the appointment.

3. Except as otherwise determined by the Parties or prescribed by the
tribunal, each Party shail submit a memorandum within thirty (30) days
after the tribunal is fully constituted. Replies shall be due within
thirty (30) days. The tribunal shall hold a hearing at the request of
either Party, or at its discretion, within thirty (30) days after
replies are due.

4. The tribunal shall attempt to give a written award within thirty
(30) days after completion of the hearing, or, if no hearing is held,
after the dale both replies are submitted. The award shall be taken by a
majority vote.

5. The Parties may submit requests for clarification of the award
wiihin fifteen (15) days after it is received and such clarification
shall be issued within fifteen (15) days of such request.

6. The award of the arbitral tribunal shall be final and binding upon the parties to the dispute.

7. The expenses of arbitration under this Article shall be shared equally between the Parties.

8. If and for so long as either Party fails to comply with an award
under paragraph 6 of this Article, the other Party may limit, suspend or
revoke and rights or privileges which it has granted by virtue of this
Agreement to the Party in default.

ARTICLE18
TERMINATION

1. Either Party may at any time give notice in writing to the other
Party of its decision to terminate this Agreement. Such notice shall be
communicated simultaneously to the International Civil Aviation
Organization (ICAO). The Agreement shall terminate at midnight (at the
place of receipt of the notice to the other Party) immediately before
the first yearly anniversary of the date of receipt of notice by the
Party, unless the notice is withdrawn by mutual decision of the Parties
before the end of this period.

2. In default of acknowledgement of receipt of a notice of
termination by the other Party, the notice shall be deemed to have been
received fourteen (14) days after the date on which ICAO acknowledged
receipt thereof.

ARTICLE 19
REGISTRATION WITH ICAO

This Agreement and any amendment thereto shall be registered with the International Civil Aviation Organization.

ARTICLE 20
ENTRY INTO FORCE

This Agreement shall enter into force when the Parties have notified
each other in writing that their respective requirements for the entry
into force of [his Agreement have been satisfied.

IN WITNESS THEREOF, the undersigned, duly authorised thereto by then-respective governments, have signed this Agreement.

FOR THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES

FOR THE GOVERNMENT OF AUSTRALIA

ANNEX 1

SECTION 1

ROUTE SCHEDULE

The designated airlines of each Party shall be entitled to perform
international air transportation between points on the following
routes:

Route for the designated airlines of the Philippines:

Points in the Philippines	Intermediate Points	Points in Australia	Beyond Points
Any	Any	Any	Any

Route for the designated airlines of Australia:

Points in Australia	Intermediate Points	Points in the Philippines	Beyond Points
Any	Any	Any	Any

Notes:

1. The designated airlines of each Party may at their option omit
points on any of the above routes provided that the services commence or
terminate in the territory in which the airline concerned has its
principal place of business.

2. The traffic rights which may be exercised by the designated
airlines at intermediate and beyond points on the above routes shall be
jointly determined between the aeronautical authorities from time to
time.

3. Between points in the territory of the other Party, the
designated airlines of each Party may only exercise own stopover rights.

SECTION 2

OPERATIONAL FLEXIBILITY

Subject to Section 1 of this Annex, the designated airlines of each
Party may. on any or all services and at the option of each airline;

(a) perform services in either or both directions:

(b) transfer traffic from any aircraft to any other aircraft at any point on the route,

without directional or geographic limitation and without loss of any
right to carry traffic otherwise permissible under this Agreement.

SECTION 3

CHANGE OF GAUGE

On any sector or sectors of the routes in Section 1 of this Annex,
any airline shall be entitled to perform international air
transportation, including under code sharing arrangements with other
airlines, without any limitation as to change at an)’ point or points on
the route, in the type, size or number of aircraft operated, provided,
however, that the capacity operated from the point of change of gauge
shall in no case exceed the capacity operated to the point of change of
gauge.

ANNEX 2

MEDIATION PROCESS

1. The rules set out in this Annex apply where the parties seeking
anamicable settlement of their dispute have agreed to submit the dispute
to mediation. The parties to the dispute may agree lo exclude,
supplement or vary any ofihe rules contained in this Annex at any time.
The party initiating mediation shall send to the other party a written
invitation to mediate under this Annex. The mediation commences
following the receipt, by the party initiating the mediation, of written
notification by the other party accepting the offer to mediate.

2. There shall be one mediator unless the parties agree that there
shall be two or three mediators. Where there is more than one mediator,
they ought, as a general rule, to act jointly. The parties to the
dispute shall seek to agree on the appointment of the sole mediator or
mediators to be chosen preferably from the rosier of suitably qualified
aviation experts maintained by ICAO. The appointment of mediators shall
be completed within 21 days of receipt of the notification referred to
at paragraph 1. Where the parties fail to agree on the appointmenl of
the mediator or mediators within that period, the party initiating the
mediation may terminate the mediation proceedings b> notification
addressed to the other party or request the President of the Council of
ICAO to make the appointments.

3. The mediator shall hear the parties, examine their claims and make
proposals to the parties with a view to reaching an amicable
settlement. The mediator may draw the attention of the parties to any
measures which might facilitate an amicable settlement of the dispute.

4. The Parties shall cooperate in good faith with the mediator and in
particular, will endeavour to comply with requests by the mediator to
submit written materials, provide evidence and attend meetings.

5. “The cost of the mediation shall be borne equally by the parties to the dispute.

6. The mechanism is without prejudice to the continuing use of the
consultation process, the subsequent use of arbitration, or termination
under Article 18.

7. The mediation process is terminated when a settlement has been
reached or when one party to the dispute terminates the mediation by
written notification to the other party