Gov’t Panel Offers Little Relief to Israeli Airlines Ahead of Open Skies

The committee rejects a slew of proposals from the local airlines to help them weather competition from the aviation pact with the European Union.

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A government committee rejected on Wednesday a slew of ideas proposed by Israeli airlines to help them weather an onslaught of competition they anticipate when Israel’s Open Skies agreement with the European Union goes into force.

The panel, which was formed after Open Skies was approved by the cabinet last April, turned down the carriers’ proposal to rescind a fee charged on incoming passengers and instead increase the fee on fliers leaving the country, as discount carriers are now permitted to do. It also rejected a plan to subject foreign airlines to the same stringent security requirements as Israeli carriers.

On the issue of security costs, the panel noted that the government had already agreed to increase the subsidy to Israeli airlines from 85% to 97.5%, enough to ensure that the expense didn’t put them at a disadvantage with their foreign rivals.

The Open Skies accord will allow more airlines to fly more flights into and out of Israel, a move that aims to cut airfares and increase the frequency of flights. But Israel’s three carriers -- El Al, Israir and Arkia -- say they won’t be able to compete because they are saddled with higher security costs and other disadvantages.

The panel, which is chaired by Transportation Ministry Director General Uzi Itzhaki, also turned down a proposal that Israeli airlines be given preference over foreign ones for flying government officials abroad.

“The proposal in question violates the clause in the Open Skies agreement that forbids direct or indirect subsidies for airlines,” the committee said, adding that giving preference would violate the Tender Law and trade agreements with other countries.

Local airlines’ request that consumer protection laws apply to foreign airlines operating in the country was rejected by the committee because it would require them to station company representatives in Israel. Such a requirement was viewed as likely to scare away competition from foreign airlines.

A request by Israeli airlines to expand the coverage of Israel's anti-trust law to included agreements between foreign airlines was also rejected by the committee. Instead, the Anti-Trust Authority stated that it would issue a legal memorandum restricting the anti-trust exemption given to foreign airlines, so that it would not apply to agreements between foreign airlines that affected air routes to and from Israel.

The committee examined the possibility of allowing Israeli airlines to reduce their own costs by operating from Ben-Gurion International Airport's old Terminal 1 building, paying the same reduced airline tax paid by the low-cost carriers that use that terminal. Regularly scheduled international flights typically use the airport's main terminal, Terminal 3, since it was opened in 2004.

Alternatively, the airlines proposed that airline taxes be raised for Terminal 1 to the level paid by the airlines operating out of the airport's Terminal 3. The committee didn’t reject that idea outright and asked the Airports Authority to examine issue of low-cost airlines operations and the fee structure at Ben-Gurion airport.

One proposal accepted by the committee for further examination was the extension of operating hours at Ovda Airport in the Negev, but if such a step were approved the committee said it should be implemented in a way that did not discriminate between local and foreign airlines.

An El Al plane. (Illustration)Credit: El Al via Bloomberg

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