The Civil Aviation Authority of the Philippines (CAAP) recently issued a memorandum updating the fees it charges for air navigation services. While the CAAP fees may seem specific at first glance, the implications to consumers are substantial. In addition to the fees, the broader global trend of extraordinary inflation will affect the consumer price index globally. 

Kerwin Tan of Tan Hassani & Counsels in the Philippines is a leading expert in aviation law. He led the L2b Aviation livestream on February 29 to discuss the recent change made by the CAAP that impacts the fee schedule and charges for air navigation services. 

The increased CAAP fees will affect all flights, including training flights conducted by pilot schools. These fee increases will impact all flights operating within Philippine airspace, including international, domestic, general aviation and training flights. Airlines and aircraft operators flying to and from the Philippines are advised to take these updated CAAP fees and charges into consideration. 

Updates on Civil Aviation Fees 

The updated CAAP fees apply to most aircraft, including international, domestic, general aviation operations, flights into and out of Philippine airports and aircraft overflying the Manila Flight Information Region (FIR). These fees are charged for the services provided during different phases of flight operations, such as air traffic management, aeronautical and flight information services, alerting services, search and rescue and use of air navigation facilities, communication and surveillance equipment.  

However, some exceptions exist, including,   

• Aircraft used by the Head of State of respective foreign governments for official purposes. 
• Aircraft engaged in non-commercial activities, mercy and humanitarian missions or government-sponsored missions. 
• Aircraft diverted from its planned route or forced to return to the airport of departure due to a medical emergency that must be declared to Air Traffic Service. 
• Aircraft exempt by the provision of existing laws or treaties.  
• Military aircraft of the Philippines. 
• Aircraft owned, leased or chartered for the Philippine President. 
• Military aircraft of a foreign government where such government provides similar exemptions to military aircraft of the Philippines. 

For example, the Philippines has a military alliance with the U.S. and in 2022, the U.S. Air Force brought in fighter aircraft (the F-22 Raptors) for the first time. They landed in the Philippines for a goodwill visit or training exercises with the Philippine Air Force, and it is possible the fees were waived if there is reciprocity between the US and the Philippines.  

The fees are calculated using formulas specific to these scenarios: 

1. Overflight and international flights
2. Domestic and general aviation 
3. Training flights 

The fees are based on the aircraft’s maximum takeoff weight (MTOW) and, for overflight and international flights, the distance of the flight plan within Philippine airspace. CAAP fees, known as air navigation charges, are usually in U.S. dollars but payable in pesos.   

Training flight fees  

Training flights have different fees because of the unique nature of flight plans and schools, specifically in the Philippines. The fees for training flights are lower, making the Philippines a popular destination for those learning to fly. Several neighboring countries have agreements allowing flight training in the Philippines.   

Additionally, training flight fees are not as affected by distance as they typically concentrate on learning takeoffs and landings. This fee schedule is based on “touch-and-go” or “expanded touch-and-go” operations, meaning the flight plan includes one takeoff or landing at the same airport.   

A touch-and-go means the aircraft lands, touches the runway and then takes off again immediately. An expanded touch-and-go means the aircraft lands right away, vacates the runway, and the pilot signals air traffic control it will not stop for more than 15 minutes, has no intention of deplaning and does not turn off the engines.   

Training flights are allowed up to four touch-and-goes for one flight plan fee. Expanded touch-and-goes are allowed two for one fee. The fees are:   

• Touch-and-go: 365 Philippine pesos (about $6.60) + 12% value-added tax (VAT) 
• Expanded touch-and-go: 730 Philippine pesos (about $13.30) + 12% VAT

Fees for training flights also vary depending on the airport type. For example, an airport without air traffic services will have reduced fees compared to one in a heavily commercialized area.   

Comparison with earlier fees  

Two notable differences exist between the current fees and those from 2011:  

1. Technology change: The previous fee schedule included a charge for transmitting Class “B” messages through the Manila AFTN Communication Center — P50 for each line of 69 characters (about $1.10). However, this fee has been eliminated now that technology is internet-based and has improved so that most devices allow over 69 characters.
    
2. Weight change: Two more weight classes (Class 3 and 4) have been added to accommodate heavier aircraft with higher MTOWs that were not previously developed.

Preferential fees for certain government relationships  

The Philippines has an agreement called the BIMP-EAGA (Brunei Darussalam Indonesia Malaysia Philippines – East ASEAN Growth Area), which was issued in 2006 to promote the cross-border flow of goods and people and increase trade, tourism and investments. It allows discounts of up to 50% on air navigation fees at designated “alternate international airports” in the Philippines, including Zamboanga, Davao, Puerto Princesa and Laoag.   

One example of BIMP-EAGA working in action is the significant growth of the Davao airport since 2011. Additionally, through BIMP-EAGA, Tan Hassani & Counsels is working with a small air operator to increase tourism flights to Manado, Indonesia.   

Consequences of unpaid fees  

For aircraft owners and lessors, failure to pay the required CAAP fees may result in:  

1. Suspension of CAAP services (registration/deregistration, air traffic, airworthiness registration). 
2. Rejection of flight plans. 
3. Denial of access to CAAP facilities and services. 
4. Liens of properties. 
5. Other general civil remedies for collection. 

It is important for airlines, aircraft operators and lessors to ensure timely payment of the updated CAAP fees to avoid disruptions to their Philippine airspace operations.  

Conclusion 

The updated CAAP fees for air navigation services in the Philippines are part of a broader global trend of rising costs and inflation affecting airline passengers, the airline industry and the consumer price index. Airlines, aircraft operators and lessors must be mindful of these fee increases and their potential impact on logistics and transportation costs. By understanding the fee structures, preferential agreements and consequences of non-payment, stakeholders can better navigate the evolving aviation landscape in the Philippines.   

About Kerwin Tan 

Kerwin Tan is a managing partner of Tan Hassani & Counsels in the Philippines. Kerwin has worked at one of the country’s largest top-tier law offices, handling all corporate and commercial transactions and related tax practices. He currently manages the firm with his partners and special counsel. Kerwin focuses on corporate and commercial transactions, foreign investments, securities and tax law. His experience includes handling transactions in banking business processes, outsourcing, construction, energy, IT, manufacturing, mining, real estate and telecom. As a specialized field, Kerwin heads the aviation law practice of the firm and has led the legal team in various aircraft financing transactions, where he has gained immense experience with different types of aircraft and situations, representing foreign aircraft owners and lessors in structuring the finance and operating leases, preparing the transaction documents and ensuring the interest of the owners are protected in the aircraft registration. For more information about Kerwin Tan and Tan Hassani & Counsels, visit https://thcounsels.ph/.  

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