Israel and EU Sign Controversial Open Skies Pact to Boost Flights and Reduce Airfares

After delays and protests, the recently signed pact will open air travel to more competition. The deal will increase the number of airlines operating in Israel and encourage others to expand routes and flights.

Overcoming months of political turbulence and a strike that briefly shut down Ben Gurion Airport in April, Israel and the European Union on Monday finally signed the controversial Open Skies agreement that promises to bring down airfares and increase flying options.

Israeli Transportation Minister Yisrael Katz attended the signing ceremony in Luxembourg, together with 27 EU transportation ministers.

"Today's agreement is very important for further strengthening the overall economic, trade and tourism relations between Israel and the EU. We expect to see more direct flights to and from Israel, lower prices, more jobs and economic benefits on both sides," said Siim Kallas, an Estonian who is the European Commissioner for Transport, and also a vice president of the European Commission.

The European Commission estimates that once it is fully implemented, Open Skies will yield cost savings of some 350 million euros a year by opening up air travel to more competition. But some of those savings will inevitably come through cost-cutting at carriers such as El Al Israel Airlines, whose staff walked out in April in an effort to block the treaty.

The EU is Israel's biggest aviation market, accounting for 57% of scheduled international air passenger movements. In 2011, EU-Israel traffic accounted for 7.2 million passengers, an increase of 6.8% from 2010. Talks between Israel and the European Commission on Open Skies began in 2008 but both sides didn't actually agree on a plan until last July.

In fact, concerns about the cost to Israeli airlines caused the government to get cold feet over approving the agreement, whose approval by Israel had to wait until after the January election. In the end, the government succeeded in removing opposition from Israeli airlines and their unions by agreeing to step up subsidies for the added security checks they need to conduct. The added security costs threatened to make Israeli carriers less price-competitive under Open Skies.

The agreement will go into effect gradually over five years, starting this year, to give Israeli airlines time to adjust. Meanwhile, an inter-ministerial committee began last week reviewing demands by Israel's airline companies to equalize their operating conditions with those of European carriers.

Under Open Skies, seven weekly flights to each European destination will be added annually. The annual increase, however, will be limited to just three flights a week at a limited number of European airports that serve as transportation hubs and are already experiencing heavy traffic. This also provides Israeli airline companies with a degree of protection during their period of adjustment.

The treaty will replace all existing bilateral passenger aviation agreements between Israel and the EU countries and gradually cancel all limits on the numbers of carriers serving routes, the frequency of flights, passenger loads and the types of aircraft permitted to fly between Israel and the EU. It also aims to boost the number of foreign airlines operating in Israel and encourage those already operating in Israel to expand the number of routes and flights.

Today, there are scheduled direct passenger flight connections between Israel and 18 EU member states.

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AP