Battle Brewing Over Ben-Gurion Airport Cash Pile

Treasury wants Airport Authority to pay more royalties, but union plans to fight

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Terminal 3 at Ben-Gurion International Airport.
Terminal 3 at Ben-Gurion International Airport.Credit: Alon Ron
Zohar Blumenkrantz
Zohar Blumenkrantz

Sometime after the Sukkot holidays, Ben-Gurion International Airport may be shut by a strike as the treasury angles to get a bigger piece of the airport’s rapidly growing revenues.

Under a plan contained in the 2015 Budget Arrangements Law, the Israel Airports Authority will pay royalties equal to 12% of its revenues, not counting fees it charges airlines and passengers, during the years 2015 to 2017. If the Knesset approves the plan, it will amount to a 500 million-shekel ($134 million) windfall for the treasury next year. That compares with just 19 million shekels the IAA paid in royalties in 2013.

Hard pressed for funds amid a slowing economy and Finance Minister’s Yair Lapid’s refusal to raise taxes or ending tax exemptions, the treasury has been tapping unprecedented new sources, such as the Jewish National Fund.

In the case of the IAA, the Finance Ministry is counting on an especially big payment for next year. That is because under the proposed law’s provisions, the payment will be based on excess income over the last few years and include future royalties for 2016 and 2017. All told, the IAA will hand over 37.5% of its revenue.

While IAA management has declined to comment on the plan, the workers committee is vowing to do battle, saying the treasury plan will hurt the IAA’s finances and jeopardize development projects that keep employees on the payroll.

“The treasury is giving us a haircut at the expense of the public,” said Pinhas Idan, the committee’s chairman, as he asked the Histadrut labor federation last week to formally declare a labor dispute. That means unions have to observe a two-week cooling-off period before they can act. “The IAA is not a cow to be milked,” he said.

The treasury denies its plan will have any impact. “An examination by the treasury shows that there won’t be any impact of projects underway due to the larger royalties. We also don’t see any damage to workers resulting,” it said in a statement yesterday.

Treasury officials insist the IAA should be paying more. Over the past decade, since the new Terminal 3 at Ben-Gurion – Israel’s main international airport – was completed, revenues from renting commercial space have nearly doubled to 1.35 billion shekels last year.

All told, the IAA took in 2.8 billion shekels from rents as well as fees from airlines using the airport.

Royalties, in the meantime, haven’t changed while the IAA has been running up income surpluses of some 600 million shekels annually, according to treasury figures. Defending the IAA, Idan notes that it pays 450 million shekels in tax every year and gets no special breaks. But the real concern of Idan, who heads one of Israel’s most powerful workers committees, is more likely the possible impacts on wages and hiring.

In 2013, half of the IAA’s 2.2 billion shekels in spending went to labor costs. Its workers are regularly cited by the treasury for being among the highest paid in the public sector, with many of the oldest staff earning gross salaries of 50,000 shekels a month, more than six times the average wage nationally.

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