1

ECONOMIC REGULATION NO. 2

(ER-2)
CHARTER OPERATIONS

Chapter I General Provisions

Chapter II Domestic Charter Trips
Chapter III International Charter Trips

CHAPTER I
GENERAL PROVISIONS

Section 1. Title of Regulation. --- This Regulation shall be

known and cited as “Economic Regulation on Charter Flights”.

Section 2. Definitions. --- This following definitions shall

control in the interpretation and application of this Regulation, unless the
context otherwise requires:

a. “Air carrier”, “domestic air carrier”, foreign air carrier”,

domestic air transportation”, and “foreign air transportation”
shall have the same meaning as that provided for in the “Act”.

b. “Charter flight” or “charter trip” means air transportation

performed by an air carrier where the entire capacity of one or
more aircraft, or less than the entire capacity of an aircraft, has
been engaged for the movement of persons and their personal
baggage or for the movement of property on a time, mileage or
trip basis:

(1) By a person for his own use (including a direct air

carrier when such aircraft is engaged solely for the
transportation of company personnel or commercial
traffic in cases of emergency);

(2) By a representative (or representatives acting jointly) of

a group for the use of such group (provided no such
representative is professionally engaged in the
formation of groups for transportation or in the
solicitation or sale of transportation services); or

(3) By an airfreight forwarder holding a currently effective

permit.

1
 2
c. “On-route” shall refer to service performed by an air carrier
between points between which said carrier is authorized to
provide service pursuant to its certificate of public convenience
and necessity or foreign air carrier permit; Provided, however,
that passenger charter trips by any all-cargo carrier are not
considered to be on-route whether or not performed between
points designed to receive service by such carrier in its
certificate or permit.

d. “Off-route” shall refer to any charter which is not on-route.

e. “Pro-rata charter” means a charter the cost of which is divided

among the passengers transported.

f. “Single entity charter” means a charter the cost of which is

borne by the charterer and not by individual passengers,
directly or indirectly.

g. “Mixed charter” means a charter the cost of which is borne, or

pursuant to contract may be borne, partly by the charter
participants and partly by the charterer.

h. ”Charter group” means that the body of individuals who shall

actually participate in the charter flight.

i. “Immediate family” means only the following persons who are

living in the household of a member of a charter organization,
namely, the spouse, dependent children, and parents, of such
members.

j. “Bona fide members” means those members of a charter

organization who have not joined the organization merely to
participate in the charter as the result of solicitation directed to
the general public. Presumptively, persons are not bona fide
members of a charter organization unless they are members at
the time the organization first gives notice to its members of
firm charter plans and unless they have actually been members
for a minimum of sic (6) months prior to the starting flight
date. This presumption will not be applicable in the case of
charters composed of (1) students and educational staff of a
single school, and immediate families thereof; (2) employees
of a single government agency, industrial plant, or mercantile
establishment, and immediate families thereof; or (3)
participants in a study group. In the case of all other charters,
rebuttal to this presumption may be offered for the Board’s
consideration by request for waiver.

2
 3
k. “Solicitation of the general public” means ----

(1) Solicitation going beyond the bona fide members of an

organization (and their immediate families). This
includes air transportation services by an air carrier
under circumstances in which the services are
advertised in mass media, whether or not the
advertisement is addressed to members of a specific
organization, and regardless of who places or pays for
the advertising. Mass media shall be deemed to include
radio and television, and newspapers and magazines.
Advertising in such media as newsletters, or periodicals
of membership organization, industrial plant
newsletters, and college newspapers shall not be
considered advertising in mass media to the extent that
---

(a) the advertising is placed in a medium of

communication circulated mainly to members of
an organization that would be eligible to obtain
charter service, and

(b) the advertising states that the charter is open

only to members of the organization, or only to
members of a subgroup thereof. In this context,
a subgroup shall be any group with membership
drawn primarily from members of the
organization. Provided, that this Paragraph shall
not be construed as prohibiting air carrier
advertising, which offers charter services to
bona fide organization, without reference to a
particular organization or flight.

(2) The solicitation, without limitation, of members of an

organization so constituted as to ease of admission to
membership and nature of membership, as to be in
substance more in the nature of a segment of the public
than a private entity.

l. “Study group” means a charter group comprised of bona fide

participants in a normal academic study course in which the
charterer is an educational institution or (2) such study course
is for a period of at least four (4) weeks duration at an
educational institution.

3
 4
Section 3. Limitation. ---- Within the meaning of this
Regulation a charter trip shall not be deemed to include transportation
services offered by an air carrier to individual members of the general public
or performed by an air carrier under an agreement with a person (other than a
direct air carrier engaged solely for the transportation of company personnel
and cargo or commercial traffic in cases of emergency, or an airfreight
forwarder mentioned in subparagraphs (1) and (3), paragraph b, Section 2 of
this Chapter) who provides or offers to provide transportation to the general
public, or transportation services engaged by persons paying for such services
an amount aggregating in excess of the transporting carrier’s duly published
charter rate or fare.

CHAPTER II
DOMESTIC CHARTER TRIPS

Section 4. Applicability. ---- This chapter shall apply to

domestic charter trips which may be undertaken by domestic air carriers only
and who hold currently effective certificates of public convenience and
necessity issued by the Board pursuant to Chapter IV of the act, but shall not
apply to charter trips undertaken by operators of aircraft having a maximum
certificated take-off weight of not exceeding 12,500 pounds.

Section 5. Authorization for Charter Trips. ----- Subject to

the limitations and regulations set forth in this Chapter, all authorized
domestic air carriers may , without need of prior authorization from the Board,
operate on-route charter trips. Off-route charter flights may be operated only
with prior authorization from the Board.

Section 6.Limitation on Amount of Charter Trips which may be

Performed. --- A scheduled air carrier shall not, during any calendar
quarter perform charter trips between points where it operates continuous
flights, which in the aggregate, or a revenue plane miles basis, exceed 2 ½%
of the revenue plane miles flown by it in its scheduled services during the
preceding 12-month period. As used herein “continuous flight” means a flight
undertaken from one point to another point or points with the use of the same
aircraft under a specific flight designation number. Any charter trips in excess
thereof shall require prior Board approval.
Section 7. Charter Trips to and from Points Served by Another
Carrier. --- No non-scheduled air carrier, except those which are
specifically authorized under their certificates to perform charter service
exclusively, may perform charter trips between any pair of points where an air
carrier operates scheduled continuous flights without prior authorization from
the Board.
4
 5

Section 8. Tariffs to be Filed for Charter Trips. --- No air

carrier shall perform any charter trips unless such carrier shall have on file
with the Board a currently effective tariff, duly approved by the Board,
showing all rates, fares, and charges for such charter trips and showing the
rules, regulations, practices, and services in connection with such
transportation.

Section 9. Charter Agreements. ---

a. Every agreement to perform a charter trip shall be in writing

and signed by an authorized representative of the air carrier and
the chatterer prior to operation of a charter flight: Provided,
that where execution of a contract prior to commencement of
flight is impracticable because of the charter has been arranged
on short notice, the compliance with the provisions hereof shall
be effected within seven (7) days after the commencement of
the flight. The written agreement shall include, without
limitation:

(1) date and place of execution fo the contract or

agreement;
(2) signature, printed or types name of each signatory, and
official position of each;
(3) dates of flights and points involved;
(4) type and capacity of aircraft and number of passenger
seats available; and
(5) rates, fares, and charges applicable to the charter trip,
including the charter price, live and ferry mileage
charges, and lay over and other non-flight charges.

b. No term or condition of the charter contracts shall on its face,

be inconsistent with any provisions of the carrier’s approved
tariff.

Section 10. Application for Charter Trips. --- In cases where

prior Board approval is required before a charter trip is undertaken, an
application therefore shall be filed with the Board at least ten (10) days before
the date of the proposed flight; service for such application shall be made on
such carriers serving the points where the proposed charter is to be operated.
Any opposition to such application shall be filed with the Board within two
(2) days from receipt of notice of such application. The Board, may, in the
interest of the public, act on such application without notice and hearing.

5
 6
Section 11. Report. --- All air carriers shall submit to the
Board a report of all charter trips undertaken during each calendar quarter
within thirty (30) days after the end of each quarter, setting forth a summary
of the information contained in the charter contract pertaining to each charter
flight.

All air carriers shall keep on file for five (5) years copies of all charter
contract consummated, which shall be made available for inspection or
examination to the Board or its duly authorized representative at any
reasonable time.

CHAPTER III
INTERNATIONAL CHARTER TRIPS

Section 12. Scope of Authorization. --- International charter trips

shall be subject to the requirements and limitations set forth in this Chapter.

Section 13. Applicability. --- The provisions of this chapter

shall apply only to international charter trips to be performed by an air carrier
wherein the passengers or cargo originate from or are destined for the
Philippines

Section 14. Limitation on the Operation of Charter Trips. --- No

air carrier shall perform any international charter trip unless specific authority
to conduct such charter trip has been granted by the Board. However, where
an international charter flight is only in transit through the Philippines, no
such prior authorization shall be required.

Section 15. Solicitation and Formation of a Chartering Group ---

a. An air carrier shall not engage, directly or indirectly, in any

solicitation of individuals (through personal contact,
advertising, or otherwise) as distinguished from the solicitation
of an organization for a charter trip, except after a charter
contract has been signed.

b. An air carrier shall not employ, directly or indirectly, any

person for the purpose of organizing and assembling members
fo any organization, club, or other entity into a group to make
the charter flight, except after the charter contract has been
signed.

Section 16. Solicitation of Charter Participants. ---- As the

following terms are defined in Section 2, Chapter I, of this Regulation,
members of the charter group may be solicited only from among the bona fide
6
 7
members of an organization, club or other entity, and their immediate
families, and may not be brought together by means of a solicitation of the
general public.

Section 17. Passengers on Charter Flights. --- Only bona fide

members of the charterer and their immediate families (except as provided in
section 18 hereof), may participate as passengers on a charter flight. The
charterer must maintain a central membership list, available for inspection by
the carrier or Board representative, which shows the date each person became
a member. Where the charterer is for round-trip transportation, one-way
passengers shall not participate in the charter flight except as provided in
paragraph c, Section 23, hereof. When more than one round-trip is contracted
for intermingling between flights or reforming of planeload groups shall not
be permitted and each such group must move as a unit in both directions.

Section 18. Participation of Immediate Families on Charter

Flights. ---- The immediate family of any bona fide member of a chart
organization may participate in a charter flight; Provided, however, that this
section shall not apply to study group charters as defined in Paragraph 1,
Section 2, Chapter 1, hereof.

Section 19. Statements of Charges. --- Any amendments or

statements by the charterer to prospective charter participants of the
anticipated individual charge for the charter shall clearly identify the portion
of the charges to be separately paid for the air transportation, for the land tour,
and for administrative expenses of the charter.

Section 20. Passenger Manifests. ---

a. Prior to each one-way or round-trip flight, a manifest shall be

filed by the charterer with the air carrier showing the names
and addressed of the persons to be transported and specifying
the relationship of each such person to the charterer (by
designating opposite his name one of the three relationship
categories hereinafter described). The manifest may include
“stand-by” participants (by name, address, and relationship to
charterer).

b. The relationship of a prospective passenger shall be classified

under one of the following categories and specified on the
passenger manifest as follows:

(1) A bona fide member of the chartering organization at

the time the organization first gave notice to its
members of firm charter plans and will have been a
bona fide member of the chartering organization for at

7
 8
least six (6) months prior to the starting flight date.
Specify on the passenger manifest as “(1) member”.

(2) The spouse, dependent child, or parent of a bona fide

member who lives in such member’s household.
Specify on the passenger manifests as “(2) spouse” or
“(2) dependent child” or “(2) parent”. Also give name
and address of member relative where such member is
not a prospective passenger.

(3) Bona fide members of entities consisting only of

persons from a study group, or a college campus, or
employed by a single Government agency, industrial
plant, or mercantile company, or persons whose
proposed participation in the charter flight was
permitted by the Board pursuant to request for waiver.

c. In the case of a round-trip flight, the above information must be

shown for each leg of the flight and any variations between the
outbound and inbound trips must be explained on the manifest.

d. Attached to such manifest must be a certification, signed by a

duly authorized representative of the charterer, reading:

“The attached list of persons includes every individual

who may participate in the charter flight. Every person
as identified on the attached list (1) was a bona fide
member of the chartering organization at the time the
chartering organization first gave notice to its members
of firm charter plans, and will have been a member for
at least six (6) months prior to the starting flight date, or
(2) is bona fide member of an entity consisting of (a)
students and educational staff of a single school, or (b)
employees of a single Government agency, industrial
plant, or mercantile establishment, or (3) is a person
whose participation has been specifically permitted by
the Civil Aeronautics Board, or (4) is the spouse,
dependent child, or parent or a person described herein
before and lives in such person’s household, or (5) is a
bona fide participant in a study group charter.

______________________

(Signature)”

8
 9
Section 21. Tariffs to be on File. ---- Prior to performing any
international air transportation under this Chapter, the air carrier shall have on
file with and approved by the Board a currently effective tariff showing all
rates, fares, and charges for international charter trips and showing all rules,
regulations, practices and services in connection with such international air
transportation, including eligibility requirements for charter groups not
inconsistent with those establishment in this Chapter.

Section 22. Written Contracts with Charterer. ----

a. Every agreement to perform an international charter trip shall

be in writing and signed by an authorized representative fo the
air carrier and the charterer prior to operation of the charter
flight: Provided, that where execution of a contract prior to
commencement of flight is impracticable because the charter
has been arranged on short notice, compliance with the
provision hereof shall be effected within seven (7) days after
commencement fo the flight. The written agreement shall
include, without limitation:

(1) Date and place of execution of the contract or

agreement;
(2) Signature, printed or types named of each signatory,
and official position of each;
(3) Dates of flights and points involved;
(4) Type of aircraft and number of passenger seats
available; and
(5) Rates, fares, and charges applicable to the charter trip,
including the charter price, live and ferry mileage
charges, and lay over and other non-flight charges.

b. No term or condition of the charter contract shall on its face, be

inconsistent with any provision of the carrier’s published tariff.

Section 23. Terms of Service. ---

a. The total charter price and other terms of service rendered

pursuant to this Chapter shall conform to those set forth in the
applicable tariff on file with the Board and in force at the time
of the respective charter flight and the contract must be for the
entire capacity of one or more aircraft, or less than the entire
capacity of an aircraft. Where a carrier’s charter charge is
computed according to mileage, and the tariff includes a charge
for ferry mileage, the carrier shall refund to the charterer any
sum charged for ferry mileage which is not in fact flown in the
performance of the charter: Provided, that the carrier shall not
charge the charterer for ferry mileage flown in addition to that
9
 10
stated in the contract unless such mileage is flown for the
convenience of and at the express direction of the charterer.

b. The carrier shall require full payment of the total charter price
or the posting of a satisfactory bond for full payment prior to
the commencement of the air transportation.

c. In the case of a round-trip charter, one-way passengers shall

not be carried except that up to five (5) per cent of the charter
group may be transported one way in each direction. This
provision shall not be construed as permitting knowing
participation in any plan whereby each leg of the round-trip is
chartered separately in order to avoid the five (5) per cent
limitation aforesaid. In the case of a charter contract calling for
two ore more round trips, there shall be no intermingling of
passengers and each planeload group shall move as a unit in
both directions.

Section 24. Petitions for Charter trips. ----

a. Petitions for charterer trips shall be submitted to the Board,

which petitions shall contain an abstract of the charter
agreement setting forth the names and addresses of the
operator, the charterer, and their agents, if any ; a description of
the proposed operations; types of aircraft to be flown; the
rates, fares, and charges for such charter trips; and if
reciprocity has not previously been established or is any
changes have occurred since the previous Board finding
thereon, documentation to establish the extent to which the
nation which is the domicile of the petitioner grants a similar
privilege to Philippine air carriers. Petitioner shall keep on file
with the board a copy of its standard form of charter
agreement. A true copy of its charter agreement actually
consummated shall be transmitted to the Board as soon as
practicable but in no event later than fifteen (15) days after
consummation of the agreement.

b. Petitions shall be field with the Board at least ten (10) days in
advance of the date fo the commencement of the proposed
charter flight, except that petitions to request for authority to
conduct planeload cargo charters may be filed on a shorter
period before the proposed flight.

c. Any party in interest may file a memorandum in support of or

in opposition to the grant of the petition. Such a memorandum
shall set forth in detail the reasons why the party believes the
10
 11
petition should be granted or denied and shall be
accompanied by such data, including affidavits, which it is
desired that the Board shall officially notice. Copies of the
memorandum shall be observed upon the foreign air carrier to
whose petition such memorandum is directed. Nothing in this
subparagraph shall be deemed to preclude the Board from
granting or denying a petition when the circumstances so
warrant without waiting for the filing of memorandum in
support of or in opposition to the petition.

d. Except to the extent that the Board shall direct that such
information be withheld from public disclosure as hereinafter
specified, every petition and its supporting documents filed
pursuant to this section shall be open to public inspection. Any
person may make written objection to the Board to the public
disclosure of such information or any part thereof, stating the
grounds for such objection. If the Board finds that disclosure
of such information or part thereof would adversely affect the
interest of such person and is not required in the interest of the
public, it will order that such information or part thereof be so
withheld.

Section 25. Approval of Petition for International Charter Trip.

---

a. Petitions for authority to operate charter trips may be

granted if the Board finds that the proposed charter trip
meets the requirements of this Chapter, that the foreign
nation which is the domicile of the air carrier grants a
similar privilege with respect to Philippine air carriers,
and that such charter trip or trips are in the public
interest.

b. In passing upon the requirements of the public interest,

the Board shall consider the following factors, among
others:

(1) Whether the foreign air carrier ahs previously

conducted similar flights on a regular and
frequent basis in relation to the regularity and
frequency of its scheduled operations;

(2) Whether the charter was generated as a result of

solicitation of individual members of the
traveling public;

11
 12
(3) Whether the foreign air carrier or its agent or
the charterer or its agent has previously violated
any of the provisions of this Chapter.

c. Copies of the letter advising the petitioner air carrier of

the action taken on its petition will be made available to
interested persons upon request.

Section 26. Keeping of Records. ---- Each foreign air carrier

granted authority by the Board under this Chapter shall make available
true copies of all manifests, airway bills, invoices and other traffic
documents covering flights originating or terminating in the
Philippines, at a place in the Philippines where such documents may
be inspected upon request by an authorized representatives of the
Board.

RECOMMENDING APPROVAL:

(Sgd.) Pacifico V. Agcaoili

PACIFICO V. AGCAOILI
Executive Director

APPROVED, September 15, 1969.

(Sgd.) Leonides S. Virata

LEONIDES A. VIRATA
Chairman, Civil Aeronautics Board

ATTESTED:

(Sgd.) Narciso G. Santos

NARCISO G. SANTOS
Officer-in-Charge

12