Transportation Minister Yisrael Katz said Tuesday that he is considering allowing foreign airlines to operate domestic routes in Israel.
Current domestic air service, which for the most part is between Tel Aviv’s Sde Dov airport and Eilat and between Ben-Gurion International Airport and Eilat, is currently operated by Israeli airlines Israir and Arkia. There is also more limited service between Haifa and Eilat.
Such a shift in policy could hurt Israir and Arkia, but it might also increase competition and drive domestic airfares down. It might also buttress the prospect of passengers using Israel as a transfer point for connecting flights.
Just north of Eilat, the Ovda airport is served by foreign carriers, which are exempt from airport fees due to subsidies provided by the Tourism Ministry. They may be well positioned to offer domestic service as well. Since 2014, 16 additional foreign airlines, including the major European discount carrier Ryanair and Cyprus-based Tus Airways, have entered the Israeli aviation market.
Katz is also considering allowing foreign airlines to establish operations bases in Israel, either at Ben-Gurion or at the new Ramon airport at Timna north of Eilat, which is due to open in October. During a visit to Ben-Gurion Tuesday, the transportation minister said Ryanair has approached the Transportation Ministry seeking to establish a permanent base of operations at the new Ramon airport in the south.
The carrier had the largest passenger numbers at the small Ovda airport last year, carrying 35 percent of passengers on the 286 flights that operated to and from the airport. Ryanair currently operates direct service between Ovda and Warsaw and Budapest as well as service to and from the Slovak capital, Bratislava.
The request is an indication that Ryanair is interested in expanding operations in Israel. It also presents the prospect that it could offer connecting flights in Israel. In March of this year, Ryanair is expected to begin air service between Ben-Gurion and Paphos, in western Cyprus.
Addressing the impact of the increased competition that the foreign airlines might pose to Israeli carriers, Katz said: “The Israeli carriers have already withstood competition as a result of the Open Skies reform. They are benefitting and the public is benefitting.”
Open Skies is a reference to an agreement signed between Israel and the European Union in 2013 that deregulates air travel between Israel and EU countries, thereby enabling airlines flexibility in serving destinations of their choice.
The transportation, finance and defense ministries will provide support to Israeli airlines seeking to expand their routes abroad, Katz said, noting that Arkia will soon begin flying between Israel and Thailand. Since 2012, the number of destinations served from Israel has increased from 110 to 138.
For the next three years, the new Ramon airport near Eilat will not charge carriers airport fees in an effort to encourage foreign airlines to use it, the transportation minister said. He has ordered landing fees to be eliminated at the Haifa airport as well and hinted at interest by foreign carriers to boost air service from Haifa. Last year Haifa airport served 12,000 passengers on foreign flights. A year before the comparable figure was 500. The ministry is apparently also seeking to establish another international airport at Ramat David in the north.
Criticizing the Tourism Ministry and government policy more generally when it comes to encouraging increased foreign tourist arrivals, Katz said he regrets that the country had not set a goal of 10 million foreign tourists a year. Last year, 2.9 million foreign tourists came to Israel, as the sector continued to rebound from a sharp drop in arrivals by overseas visitors during and after the 2014 war, when Israel fought with Hamas and its allies in the Gaza Strip.
“People shouldn’t tell me about the security problem. It’s everywhere at this point. We are a developed country that can address [the needs] of foreign tourists, but there isn’t appropriate tourist infrastructure. I visit a hotel in the Galilee and see Chinese [visitors] staying there, but there aren’t people to guide them in their language,” Katz said.
He also criticized the subsidies that the Tourism Ministry provides to foreign airlines for every passenger flown to and from the Ovda airport near Eilat. “I don’t believe in subsidies,” he said. “I believe in competition.”
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