Law for Promoting the Exploitation of Low-Cost Air Transport Routes

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 through the application of fares 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 the jobs that were affected by the COVID-19 health emergency and generate new employment opportunities in tourism and commercial aviation. Likewise, to increase international passenger traffic, attract new airlines, encourage the creation of low-cost routes with fares that generate an increase in national and international passenger traffic, 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.

INTERINSTITUTIONAL COMMISSION FOR THE REGULATION OF AIR TRANSPORT ROUTES (CIRRTA): For the application of this Law, the State Secretariat of the Tourism Office shall preside over a commission composed of: The Honduran Civil Aeronautics Agency (AHAC), the State Secretariat of the Economic Development Office, the State Secretariat of the Promotion and Investment Office and the Administrator of the Airport 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 Interinstitutional 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 Interinstitutional 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 the 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 that are 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 conduct advance commercialization of routes, prior to the start of its operations.

• 2)

  PROMOTION INCENTIVES. In order to increase the arrival of national and international tourists to the tourist destinations of the country, the Honduran Tourism Institute (IHT) may allocate economic resources for the promotion of a commercial air route in a shared marketing plan 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 that the operational costs of each Airport Administrator permit: a) Discount on the landing and takeoff fee at International Airports authorized by the State of Honduras applicable to each route of operations under the regular flights 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 above is not limiting to the incorporation of other international airports or aerodromes that operate international flights. b) Up to one hundred percent (100%) discount for the airline's airport services during the first (1st) year of operations of the route which may include: Boarding bridges, passenger check-in counters, wifi service for its operation, administrative and operational affairs office (Back Office), lighting and aircraft parking. 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 Interinstitutional Commission for the Regulation of Air Transport Routes (CIRRTA).

• 4)

  DISCOUNT ON AIRPORT RATE. The State of Honduras, with the purpose of benefiting national and international passengers who travel on approved low-cost routes, establishes a discount stimulus on the airport rate per passenger, remaining at thirty-four American dollars (USD 34.00). Passengers covered by international treaties subscribed to and ratified by the State of Honduras are excepted. The airline shall collect said rate at the time of ticket sale, and must pay the Airport Administrator the total amount collected based on a reconciliation of data between both parties; Airlines that are members of the International Air Transport Association (IATA) shall 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 Immigration Institute (INM) nineteen percent (19%) without prejudice to the percentage that corresponds to the Honduran Tourism Institute (IHT) in accordance with the Decrees, Agreements or Conventions established for these purposes. In the specific case of the 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 Immigration 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 incentive pricing practice for tourism and business, which is at least 40%, a forecast that will be reviewed along with its proper justification by the Interinstitutional Commission for the Regulation of Air Transport Routes (CIRRTA) after the first year of operation;

• 2)

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

• 3)

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

• 4)

  The insurance contemplated in the Civil Aeronautics Law; and,

• 5)

  Documentation and/or information required by the Interinstitutional 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 Interinstitutional Commission for the Regulation of Air Transport Routes (CIRRTA), the Airport Administrator and the beneficiary Airline, which must contain the conditions stipulated by the Interinstitutional Commission for the Regulation of Air Transport Routes (CIRRTA) regarding routes, flight frequency, projected volumes of passengers, form of reconciliation and liquidation of the airport rate, approved benefits for the route, duration of the contract and other elements established in the Regulation. For the purposes of the application of the aforementioned contract it shall be of public order and all governmental institutions, administrators or concessionaries of airports must observe and respect its validity, benefits and agreements established therein. Furthermore, the Airport Administrator must register this contract in the National Aeronautics Registry, at no cost.

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

OPEN SKIES POLICY. At all airports and runways described in this Law, the open skies policy is ratified, consequently, all flights originating from Central America shall be subject to the provisions established in existing agreements and those that may be entered into 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) must jointly regulate this Law within a maximum period of forty-five (45) days, which must be sent to the State Secretariat of the Tourism Office for its respective approval.

EFFECTIVE DATE. This Law enters into force once published in the Official Newspaper "La Gaceta". Done 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 Power. Therefore: Let it be executed. Tegucigalpa, M.D.C., July 5, 2021 JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE STATE SECRETARY OF THE TOURISM OFFICE NICOLE MARRDER AGUILAR