Law for the Promotion of Low-Cost Air Transport Route Operations

PURPOSE OF THE LAW. This Law is of public order and has as its purpose to stimulate and promote the national and international air transport industry on low-cost routes to facilitate access to the Honduran market with the application of tariffs that stimulate the development of civil aviation in the country and an increase in inbound tourism, commercial, business, scientific, educational, cultural, among others, to recover jobs that were affected by the COVID-19 health emergency and generate new employment opportunities in tourism and commercial aviation. Likewise, to increase the traffic of international passengers, attract new airlines, incentivize the creation of low-cost routes with tariffs that generate an increase in the traffic of national and international passengers, maintaining a continuous flow, focusing on cost containment and operational efficiency and increase the number of routes and frequencies with direct connection from Honduras to a greater number of international destinations, among others.

LOW-COST ROUTES. Low-cost routes are considered those operated by an airline that provides air ticket prices in an economical and constant manner to a destination, in order to stimulate a greater volume of passengers from and to that destination, strengthening the country's economy through inbound tourism, commercial, scientific, corporate and business tourism, as well as cultural, educational, among others.

INTER-INSTITUTIONAL COMMISSION FOR THE REGULATION OF AIR TRANSPORT ROUTES (CIRRTA). For the application of this Law, the State Secretariat of Tourism will chair a commission made up of: The Honduran Civil Aeronautics Agency (AHAC), the State Secretariat of Economic Development, the State Secretariat of Promotion and Investment and the Airport Administrator that will provide the service for the route in question. For the purposes of granting the benefits contained in this Law to the routes presented and requested by Airlines, the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA) must evaluate whether the proposed route responds to the strategic development objectives of a destination and/or airport, as well as the tourist and economic development of the country. Likewise, the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA) must define the benefits that will be granted to the airline in relation to the proposal presented and give approval of the route by the Honduran Civil Aeronautics Agency (AHAC).

INCENTIVES FOR LOW-COST ROUTES. In order to stimulate the growth of commercial aviation and the recovery of jobs in the tourism sector, benefits and incentives are created applied to the operation of low-cost air routes.

• 1)

  AUTHORIZATION BENEFITS. The Honduran Civil Aeronautics Agency (AHAC) shall issue the operating permit for airlines with low-cost routes, based on the principles of simplification and procedural economy. For this purpose, the Regulation of this Law shall contain the procedure to be used for the alternatives allowed by the current Civil Aeronautics Law, in addition to support for any administrative and commercial activity that the Airline requires for its start of operations in Honduras. The Honduran Civil Aeronautics Agency (AHAC) shall allow the Airline to carry out advance marketing of the routes, prior to the start of its operations.

• 2)

  PROMOTION INCENTIVES. In order to increase the arrival of national and international tourists to the country's tourist destinations, the Honduran Tourism Institute (IHT) may allocate economic resources for the promotion of a commercial air route in a marketing plan shared with the airline, under a contract executed between the parties, or include the promotion of the route in its own marketing strategy.

• 3)

  AIRPORT BENEFITS. The beneficiaries of this Law may enjoy the following concessions that will be granted to the extent permitted by the operating costs of each Airport Administrator: a) Discount in the landing and takeoff rate at International Airports authorized by the State of Honduras applicable to each route of operations under the regular flight modality as follows: For the airports of San Pedro Sula and Roatán: Up to seventy-five percent (75%) discount for a maximum of one (

  • 1)

    year and up to fifty percent (50%) for up to two (

  • 2)

    additional years or up to a maximum of three (

  • 3)

    years in total. For the La Ceiba Airport: Up to one hundred percent (100%) discount for a maximum of two (2) years and up to fifty percent (50%) for one (1) additional year or up to a maximum of three (3) years in total. The foregoing is not limiting for the incorporation of other international airports or airfields that operate international flights. b) Up to one hundred percent (100%) discount for the airport services of the airline during the first (1st) year of operations of the route which may include: Boarding bridges, check-in counters for passengers, wifi service for its operation, administrative and operational affairs office (Back Office), lighting and parking for aircraft. The granting of these benefits shall depend on the availability that the Airport Administrator has at the time of the route request by the airline, the analysis and approval of benefits carried out by the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA).

• 4)

  DISCOUNT IN AIRPORT RATE. The State of Honduras, with the purpose of benefiting national and international passengers who travel on approved low-cost routes, establishes a stimulus of discount in the airport rate per passenger, setting this at thirty-four American dollars (USD 34.00). Passengers who are covered by international treaties executed and ratified by the State of Honduras are exempted. The airline shall collect said rate at the time of ticket sale, having to cancel to the Airport Administrator the total amount collected based on a reconciliation of the data between both parties; Airlines that are part of the International Air Transport Association (IATA) must follow the process established through the institution. The Airport Administrator shall distribute from the total collection of the airport rate the amounts corresponding to each of the institutions that receive income from said rate as follows: International Regional Organization for Agricultural Health (OIRSA) six percent (6%), Airport Security Division (DSA) four percent (4%), National Migration Institute (INM) nineteen percent (19%) this without prejudice to the percentage corresponding to the Honduran Tourism Institute (IHT) in accordance with the Decrees, Covenants or Agreements established for these purposes. In the specific case of Palmerola International Airport in the city of Comayagua, due to the Company's financial commitments, the discounted airport rate applied to low-cost routes shall be distributed as follows: Airport Security Division (DSA) four percent (4%), National Migration Institute (INM) seven percent (7%).

OBLIGATIONS. Airlines that are covered under this Law must comply with the following obligations:

• 1)

  Present a projection of air traffic of new users of air transport generated by the stimulus pricing practice for tourism and business, which is at least 40%, a forecast that will be reviewed together with its proper justification by the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA) after the first year of operation;

• 2)

  Prior to the start of operations, must present to the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA), the tariff schemes that allow certification of compliance with the practices of a low-cost route that includes promotions and discounts;

• 3)

  The guarantees contemplated in the Civil Aeronautics Law for consumer protection in the case of suspension of operations and another for the services provided by the State through this;

• 4)

  The insurance contemplated in the Civil Aeronautics Law; and,

• 5)

  Documentation and/or information required by the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA) for its proper analysis contemplated in the Regulation of this Law.

CONTRACT. Once the route is approved, a contract shall be executed between the Representative of the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA), the Airport Administrator and the beneficiary Airline, which must contain the conditions stipulated by the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA) regarding routes, flight frequency, projected passenger volumes, form of reconciliation and settlement of the airport rate, benefits approved for the route, duration of the contract and other elements established in the Regulation. For the purposes of the application of said contract, it shall be of public order and all governmental institutions, airport administrators or concessionaires must observe and respect its validity, benefits and agreements established therein. Furthermore, the Airport Administrator must register this contract in the National Aeronautic Registry, without any cost.

SPECIAL PROVISION FOR LOW-COST NATIONAL AIR ROUTES. National airlines that wish to operate low-cost routes operated at airfields at the national level and/or with connection to international routes, must present to the Inter-Institutional Commission for the Regulation of Air Transport Routes (CIRRTA) their commercial and operational proposal for its review and approval of benefits to which they qualify in accordance with this Law.

OPEN SKIES POLICY. At all airports and runways described in this Law, the open skies policy is ratified, consequently, all flights from Central American origin shall be subject to the provisions established in the existing agreements and those that may be executed between the Honduran Civil Aeronautics Agency (AHAC) and the Civil Aeronautics entities of said countries.

REGULATION. The Honduran Civil Aeronautics Agency (AHAC) and the Honduran Tourism Institute (IHT) shall jointly regulate this Law within a maximum period of forty-five (45) days, which must be sent to the State Secretariat of Tourism for its respective approval.

EFFECTIVE DATE. This Law shall enter into force once published in the Official Journal "La Gaceta". Given in the city of Tegucigalpa, municipality of the Central District, in the Session held by the National Congress in a Virtual manner, on the second day of the month of July of the year two thousand twenty-one. MARIO ALONSO PÉREZ LÓPEZ PRESIDENT JOSÉ TOMÁS ZAMBRANO MOLINA SECRETARY ROSSEL RENÁN INESTROZA MARTÍNEZ SECRETARY To the Executive Branch. For Such Reason: Execute. Tegucigalpa, M.D.C., July 05, 2021 JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE STATE SECRETARY IN THE OFFICE OF TOURISM NICOLE MARRDER AGUILAR