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March 13, 2009

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