Israeli airlines are worried: Full competition will start in five years.
Israeli airlines are worried: Full competition will start in five years. Photo by Moti Milrod
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Israel and the European Union on Thursday concluded an aviation agreement that is aimed at reducing air fares to and from Israel, the EU said. The head of the Israel Civil Aviation Authority, Giora Rom, signed the deal after three days of negotiations with EU representatives.

The two sides have been discussing such a deal since the end of 2008. It will have to be approved by Transportation Minister Yisrael Katz, who has said in the past that he wants to make sure any open-skies arrangement with Europe provides adequate protections for Israeli airlines. The agreement will take effect on April 1, 2013.

The deal will be phased in over a five-year period, with each new phase going into effect in late March.

The new agreement will replace existing bilateral agreements between Israel and each EU nation specifying which airlines are allowed to fly to which destinations, as well as the frequency of flights.

A set number of weekly flights to certain destinations will be added every year. At the end of the five-year period there will be full competition on all routes between Israel and the EU, and every airline from the EU or Israel will be allowed to fly to any destination within the region as many times as it wants. The agreement differentiate between flights that terminate in Israel or the EU and that continue on to a final destination.

Such traffic using a European airport as a connection to farther destinations, such as the United States or the Far East, has become quite common in the past decade. This has hurt Israeli airlines in particular as they are not members of any international airline alliances. The EU is Israel's most important destination for flights, with 57% of all Israeli international passenger flights going to the EU. There are now direct flights from Israel to 16 EU nations.

Another section of the agreement addresses harmonizing aviation laws between Israel and the EU. For example, many European laws have no local counterpart, such as that on flying disabled persons. The new agreement will force Israeli airlines to comply with European rules, which will entail significant spending.

Katz will meet next week with representatives of Israeli airlines to discuss the agreement.

"The aviation agreement will be examined based on two main factors: Promoting the Open Skies policy, which is intended to increase competition, lower prices and increase the number of [incoming] tourists; along with protecting the strength of Israeli airlines," Katz said on Thursday.

In preparation for the agreement, the Antitrust Authority was instructed to remove all limitations that discriminated against Israeli airlines as compared to European airlines, to allow them to compete on an equal footing.

"The ... agreement ... is very important for further strengthening the overall economic, trade and tourism relations between Israel and the EU," said Siim Kallas, vice-president of the European Commission and commissioner for transport.

"Israel is a key partner for the EU and the agreement will strengthen the aviation links between the two partners and establish a high level of regulatory convergence," Kallas said.

Israeli airline workers last month said they feared the agreement could harm earnings of Israeli carriers, calling a work dispute that led Yisrael Katz to temporarily delay the deal.