As the Israir jet was making its way across the Mediterranean to Italy, a flight attendant was making her way down the aisle with food and drinks. But in contrast to two or three years ago, it came with a tab: $1 for a bottle of mineral water, $7 for a sandwich or salad and $3 for a carbonated drink.
Israir’s passengers were flying Open Skies-style. Since the aviation pact with the European Unon was signed two years ago, it has opened routes to more carriers, offering more seats and more destinations.
The impact has been lower airfares, led by the rapid expansion of low-cost carriers. But it’s also meant that flying looks more like riding an intercity bus. Even regular airlines like Israir have had to cut airfares and costs.
“We’ve adopted the standard of low-cost carriers,” admits Uri Sirkis, the airline’s CEO. “If the turnaround time from when a plane lands to when it takes off again was once an hour and 20 minutes, today it's 55 minutes. We have a different service profile in the cabin – no food and drink. The new plane doesn’t have inflight entertainment. We’ve eliminated everything – we don’t believe in it anymore.”
The number of seats on flights to and from Israel grew 10% in the summer of 2013, the first year of Open Skies, and another 11% in 2014. This year, with the second phase of the agreement going into effect, the supply will grow another 8%, estimates Israel’s Civil Aviation Authority.
The second phase of Open Skies allows for a big increase in the number of scheduled flights between Israel and the EU. The agreement gives Israel’s three airlines – Arkia as well as El Al and Israir — time to seek a freeze or changes in the agreement if they feel the reform has caused them critical damage. Until now, none have sought any measures.
The biggest growth has been for low-cost carriers like EasyJet, whose passenger loads grew to 2.2 million in 2014 from one million the year before.
UP, El Al Airlines’ low-cost brand, leads the market, with a 35% share followed by the industry leader EasyJet, Pegasus and Wizz Air.
“The Open Skies reform has been a huge success, proving again that competition is the best answer to breaking monopolies and improving service,” says Israel Katz, who signed the Open Skies agreement and remains transport minster in the current government. “Flying abroad has become a product for everyone, available to every Israeli.”
The Central Bureau of Statistics backs up Katz's claim. Last year, 5.2 million trips abroad were made by Israelis despite Operation Protective Edge that kept many people at home over the summer. That was up from 4.2 million in 2012, before Open Skies.
EasyJet can easily serve as the poster boy for the aviation revolution.
Until 2013, air travel was governed by bilateral agreements between Israel and EU countries, which restricted how many carriers could fly, how often and to where. EasyJet, which began serving Israel in 2009, flew only to Britain and Switzerland.
This year EasyJet is operating nine routes between Tel Aviv and European destinations with 37 weekly flights. Its latest is three weekly flights on the Paris-Tel Aviv route inaugurated last year. It’s now the third-biggest airline out of Tel Aviv after El Al and Turkish Airlines, selling nearly all of its tickets online directly to consumers.
All those airlines, flights and seats have brought airfares down on average about 15%, industry sources estimate. On routes where competition is most intense, such as Berlin, Prague and Rome, fares have dropped by 30%. Travelers willing to order tickets six months in advance and off-season can find them for as little as $250-300.
On the other hand, even a low-cost flight can reach $500-600 as the flight date approaches. Supply and demand are the biggest factor in price, which explains why London airfares have not fallen under Open Skies, even though EasyJet is competing.
“If the regular airlines weren’t filling their planes and people weren’t buying seats, they would lower prices to be closer to Easy Jet’s,” says one industry source, who asked not to be named.
But there is a downside to Open Skies, too. “No one bothered to deal with the Consumer Protection Law regarding foreign airlines, which don’t have any personnel in Israel and sell tickets directly to Israeli customers,” says Dana Lavi, CEO of the online travel site Daka 90. “What that means is that the consumer is left without any protection when he makes purchases like these. The skies are open but the consumer is defenseless.”
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