MANILA, Philippines (2nd UPDATE) - President Benigno Aquino III has signed an executive order liberalizing Philippine aviation by easing restrictions on foreign airlines in select international airports outside Metro Manila.

Malacañang said EO 29 would boost tourist arrivals and investments in the country.

“With this, we look forward eventually to an increase in air traffic coming in to the Philippines. We hope that would bring in more tourists, more investments and spur competition in the Philippine aviation industry and allow it to be competitive internationally,” Communications Secretary Ricky Carandang told reporters.

EO 29 authorizes Philippine aviation panels to offer and promote "third, fourth, and fifth freedom rights to the country’s airports other than the Ninoy Aquino International Airport (NAIA) without restriction as to frequency, capacity and type of aircraft, and other arrangements" that will serve the national interest as may be determined by the Civil Aeronautics Board (CAB).

It said that the CAB may grant any foreign air carriers increases in frequencies and/or capacities in the country’s airports other than NAIA, subject to the conditions required by existing laws, rules and regulations.

It also noted that the CAB cannot grant any foreign air carrier "cabotage" traffic rights or the right to transport passengers and goods between two or more points within the Philippines.

“There is a prohibition on cabotage, which means if you are a foreign carrier, if you fly people to Cebu, you cannot fly them from Cebu, say to Manila. Domestic aviation will still primarily be in the hands of local carriers. So we believe through those actions, the local aviation industry will continue to have the ability to compete,” Carandang said.

EO 29 was signed together with EO 28, which ordered the reorganization of the air negotiating and consultation panels.

The Philippine Air Negotiating Panel shall be responsible for initial negotiations leading to the conclusion of the relevant Air Service Agreements (ASAs) while the Philippine Air Consultation Panel shall be responsible for the succeeding negotiations of these ASAs or similar arrangements.

Aquino earlier said the twin EOs will give teeth to EO 219 signed by former President Fidel Ramos in January 1995 that set the framework for opening up the country’s civil aviation sector.

Aquino promised investors during the Public-Private Partnership (PPP) summit last year that he would put in place the open skies regime to increase tourist arrivals and investments. A number of airport projects are up for bidding under the PPP scheme.

PAL labor woes

The ongoing row between flag carrier Philippine Airlines (PAL) and its labor unions was also partly the reason why the Aquino government hastened the adoption of an open skies policy.

The ground crew and flight attendants labor unions of PAL have threatened to stage strikes to paralyze the airline's operations as separate negotiations with PAL management stalled. - With a report from Willard Cheng, ABS-CBN News