Transaction_Fee___RESOLUCION_NUMERO_03596_of_September_2006_(Eng).pdf

Republic of Colombia (Coat of Arms)

Ministry of Transport

Special Administrative Unit of the Civil Aviation Authority

RESOLUTION No.

03596

(September 1, 2006)

Whereby regulations on the Fee and ticket sales commissions for air transportation of passengers and other provisions are set.

The General Director of the Special Administrative Unit of the Civil Aviation Authority by executing its legal powers, especially the ones conferred by Articles 1782, 1866 and 1868 of the Commercial Code, as well as numbers 10, 14, 15 and 16 of Article 5, and number 4 of Article 9 of Decree 260 of 2004, and

WHEREAS:

1. Article 333 of the Political Constitution sets forth the principles of the economic activity and free private initiative within the limits of common goods. Concomitantly, free competition also is allowed as a general right that implies responsibilities and establishes that the State will intervene in order to impede the obstruction or restriction of economic freedom and that people or companies abuse their dominant position in the domestic market. As a consequence of the above, the Constitution establishes that the State may delimit the scope of the economic freedom when so demanded by the social interest, the environment, and the cultural heritage of the Nation;

2. Pursuant to Article 334 of the Political Constitution, the handling of the economy is a duty of the State which must intervene by the authority of law, among other activities, regarding the provision of public and private services to rationalize economy in order to get the improvement of the life quality of the inhabitants and the even distribution of development opportunities and benefits. In such regard, it is clear that the intervention of the State in the economy must seek to, among other objectives, the promotion of productivity and competitiveness;

3. In developing the constitutional precepts mentioned above, Law 105 of 1993, whereby basic provisions on transportation, clearly established the intervention of State in this economic sector and stated that it is in charge of planning, controlling, regulating, and surveilling transportation and related activities;

4. Law 336 of 1996, whereby the National Statute of Transportation was adopted, established in its Article 68 that air transportation, besides being an essential public service, will continue exclusively being governed by the regulations of the Commerce Code (Book 5, Preliminary Chapter, and Second Part), the Aeronautic Regulations of Colombia established by the Special Administrative Unit of the Civil Aviation Authority, and the treaties, agreements, conventions, and international practices duly adopted or applied by Colombia;

5. Article 1782 of the Commerce Code grants powers to the Aviation Authority to issue the regulations that govern the air transportation sector;

6. Article 1868 of the Commerce Code points out that the power to inspect exercised by the Aviation Authority to guarantee the stability of the air transportation industry and the interests of the public is spread to the travel agents, intermediaries, and collective travel operators that usually exploit the industry of tourism in cooperation with air transportation service providers;

7. Decree 260 of 2004, in its Article 5, numbers 10, 14, 15 and 16, clearly establishes the Aviation Authority to regulate the Fees applicable to air transportation services;

8. The State Council, through Resolution issued on September 6, 2001, ratified the competence of the Special Administrative Unit of the Civil Aviation Authority to regulate this matter;

9. Paying attention to the challenges and difficulties faced by the air transportation industry worldwide and its main distribution channel, i.e. travel agencies, and regarding the questions posed by the companies and unions (Atac-Alaico-Anato) that participate in this activity in Colombia, the Aviation Authority has studied the issues related to Fees of flight tickets and the commissions paid to travel agencies. In this matter, the Aviation Authority has considered several regulation measures to guarantee economic freedom and free competence for the companies involved in the sector at the same time that promote efficiency and reduction of costs in the provision of services in such way that competitiveness of the sector increases and users are the beneficiaries of air transportation services;

10. The National Government, within the framework of the 11 th Summit of Travel agencies, expressed its intention to promote the development of competitiveness of travel agencies so that they can face the challenges of the economic transformation they have to undergo through;

11. This administrative act is issued as a result of the agreement executed between the National Government, the Colombian Association of Travel Agencies and Tourism –Anato-, the Association of International Airlines in Colombia – Alaico-, and the Association of Air Transport in Colombia - Atac;

12. Regarding the above, this office

RESOLVES:

Article 1°. Commissions Airlines shall pay to travel agencies due to marketing of international air passenger transport services (flight tickets, ticket orders, Miscellaneous Charges Order (MCO) replacing tickets, Prepaid Ticket Advice (PTAs or placed tickets), regarding the sales in Colombia, will be subject to the agreement between the parties, so that each single airline can freely agree with the travel agencies, as long as such commission is not lower than the minimum level, as follows:

a) As of November 1, 2006, an amount no lower than six percent (6%) of the airfare;

b) As of July 1, 2007, an amount no lower than five percent (5%) of the airfare;

c) As of March 1, 2008, an amount no lower than four percent (4%) of the airfare;

d) As of November 1, 2008, an amount no lower than three percent (3%) of the airfare.

e) As of July 1, 2009, an amount no lower than one percent (1%) of the airfare.

Sole Paragraph. Up to October 31, 2006, the commission Airlines will pay travel agencies due to the marketing of international air passenger transport (air tickets, ticket orders, MCOs replacing air tickets, PTAs or placed tickets), in regards to the sales made in Colombia, and cannot be lower than eight percent (8%).

Article 2. The commission airlines will pay travel agencies due to marketing of domestic air passenger transport services (air tickets, ticket orders, MCOs replacing air tickets, PTAs or placed tickets) will be subject to the agreement between the parties, so that each single airline can freely agree with the travel agencies, as long as such commission is not lower than the minimum level, as follows:

a) As of November 1, 2006, an amount no lower than six percent (6%) of the airfare;

b) As of July 1, 2007, an amount no lower than five percent (5%) of the airfare;

c) As of March 1, 2008, an amount no lower than four percent (4%) of the airfare;

d) As of November 1, 2008, an amount no lower than three percent (3%) of the airfare.

e) As of July 1, 2009, an amount no lower than one percent (1%) of the airfare.

Sole Paragraph. Up to October 30, 2006, the commission Airlines will pay travel agencies due to the marketing of domestic air passenger transport (air tickets, ticket orders, MCOs replacing air tickets, PTAs or placed tickets), cannot be lower than seven percent (7%) or higher than twelve percent (12%).

Article 3°. As of November 1, 2006, the mandatory and non-refundable charge of a fee due to the issuance of tickets or “administrative fee”, applicable to the sales of domestic and international air passenger transport (air tickets, ticket orders, MCOs replacing air tickets, PTAs or placed tickets) made in Colombia will apply and shall be charged by travel agencies and intermediaries and the airlines in its direct sales according to the following provisions:

a) As of November 1, 2006, the administrative fee due to international sales will correspond to the following amounts:

Fee Range Administrative Fee

Higher or equal to USD 300 USD 5

Higher than USD 300 up to USD 500 USD 8

Higher than USD 500 up to USD 800 USD 13

Higher than USD 800 USD 27

Domestic sales will mean a commission of COP$8,800 for One Way tickets, and COP$15,700 for Round Trip tickets;

b) As of July 1, 2007, the Administrative Fee due to international sales will be as follows:

Lower or equal to USD 300 USD 7

Higher than USD 300 up to USD 500 USD 12

Higher than USD 500 up to USD 800 USD 20

Higher than USD 800 USD 41

Domestic sales will mean a commission of COP$11,000 for One Way tickets, and COP$19,700 for Round

b) As of March 1, 2008, the Administrative Fee due to international sales will be as follows:

Lower or equal to USD 300 USD 9

Higher than USD 300 up to USD 500 USD 16

Higher than USD 500 up to USD 800 USD 26

Higher than USD 800 USD 54

Domestic sales will mean a commission of COP$13,200 for One Way tickets, and COP$23,600 for Round

b) As of November 1, 2008, the Administrative Fee due to international sales will be as follows:

Lower or equal to USD 300 USD 11

Higher than USD 300 up to USD 500 USD 20

Higher than USD 500 up to USD 800 USD 33

Higher than USD 800 USD 68

Domestic sales will mean a commission of COP$15,400 for One Way tickets, and COP$27,500 for Round

b) As of July 1, 2009, the Administrative Fee due to international sales will be as follows:

Lower or equal to USD 300 USD 15

Higher than USD 300 up to USD 500 USD 28

Higher than USD 500 up to USD 800 USD 46

Higher than USD 800 USD 95

Domestic sales will mean a commission of COP$17,600 for One Way tickets, and COP$32,000 for Round

Paragraph 1. To the purpose of applying the Administrative Fee to domestic air transport services, regarding routes that include two or more trips in terms of transit or connections with the same airline, the Administrative Fee due to such concept will be charged once only.

Paragraph 2. As of January 10, 2007 the amount of the Administrative Fee due to domestic sales will be readjusted according to the variation of the CPI for the year 2006, and then as of January 10 each year it will be readjusted according to the previous year’s CPI variation.

Article 4. In the case of sales taking place on the Internet, airlines and travel agencies may charge a different Administrative Fee from the one mentioned above. Airlines and travel agencies shall inform the Aviation Authority regarding said Administrative Fee and of any other conditions on the selling of air tickets on the Internet.

Sole Paragraph. This article will be in force at the moment the possibility to make online payments with credit cards is verified, both for travel agencies and the airlines, and a different Administrative Fee from the one mentioned above may be charged.

Online or on-the-internet sales are those which are virtually conducted on the web without the intervention of any agent available on the market.

Article 5. For the purpose of obtaining the details of the passengers and for the control of said information by the Aviation Authority, the Administrative Fee amount mentioned in this resolution shall be specified in the ticket, or in the Automated Ticket/Boarding Pass (ATB), or Multipurpose Document (MPD) or any other mean, so that its charge is known by the users.

For the purpose of fulfilling the obligation above, travel agencies may use the same information means (tickets, ATB, MPD, or any other mean), used by airlines in their direct sales.

Airlines and travel agencies must inform the Aviation Authority the means used to inform users of the Administrative Fee applicable to the sale of flight tickets subject matter of this resolution.

Article 6. Payments for the selling of flight tickets and commissions to travel agencies will be made on the sixth (6th) day of each month for the sales of the first fortnight of the immediately previous month, and on the twenty-first (21 st ) day of each month for the sales of the second fortnight of the immediately previous month. This regime will be in force for two years as of the date of enforcement of this Administrative Act and then it will be regulated by IATA.

Paragraph 1. In case the above mentioned days are holiday, payment will be made the next immediately business day.

Paragraph 2. Through a written agreement, the parties involved may pact different dates to the ones mentioned above to make commission payments.

Article 7. As of the date on which this resolution is enforced, airlines and IATA (for the sales processed through Billing and Settlement Plan (BSP)), must submit a monthly report on the application of the Administrative Fee and the payment of commissions subject matter of this resolution, which must be submitted to the Air Transport Office of the Civil Aviation Authority within the first fortnight (15 calendar days) of each month.

Said report shall specify the name of the airline or travel agency, the number of tickets and documents processed, broken down by domestic and international tickets, the amount collected, the commission amount and the administrative fees mentioned in this resolution.

Article 8. The marketing of domestic and international air passenger transport services (flight tickets, ticket orders, MCOs replacing flight tickets, PTAs or placed tickets), must meet the technical equity and sufficiency criteria set forth in the RAC. By marketing said services, travel agencies and intermediaries must apply only the fees approved by the Aviation Authority.

In addition, in direct sales, airlines must restrain from offering or granting a customer different conditions from the ones offered or granted to other customers or travel agencies with the same characteristics, if said behavior is intended to decrease or keep out competence, or impede market access to travel agencies and intermediaries.

Article 9. Notwithstanding the investigation and sanctions due to the breach of the competence regime, no compliance with the provisions in this resolution is a violation to the fee regime, and likewise reimbursement of the Administrative Fee on the part of the actors in the market will also be deemed as no compliance and such behavior may be investigated and sanctioned according to the provisions in the Aviation Regulations and any other applicable regulations.

Article 10. This resolution does not apply to sales completely made on the Internet, both for airlines and travel agencies as long as the conditions set forth in the Sole Paragraph of Article Four of this resolution is fulfilled.

Article 11. The economic impact both to travel agencies and airlines, derived from the enforcement of this resolution, will be revised on the following dates:

First revision: January 15, 2008 Second revision: May 15, 2009

Article 12. This resolution will be in force as of its publication in the Official Journal and repeals

Resolutions No. 2743 of 1988, 3829 of 2004 and any other contrary regulations.

To be published and enforced.

Given in Bogotá, D. C., on September 1, 2006.

By the General Director, Fernando Sanclemente Alzate.

By the Secretary General, Ilva Restrepo Arias.

(C.F.)