Transport Min. Recommends Open Skies and Low-cost Flights

El Al trying to coerce workers into signing deal over layoffs

"There should be unlimited competition between Israeli airlines to any destination around the world," is one of the recommendations of the committee that examined Open Skies, headed by Transportation Ministry Director General Gideon Siterman. He reported the committee's conclusions yesterday at a press conference, and will present them to the Cabinet soon.

The recommendations will require opening the agreement reached with El Al on the eve of its privatization, and cancelling the airline's monopoly on most routes to and from Israel. El Al's prospectus clearly stated that the transportation minister had the right to add other Israeli airlines to the routes that had previously been exclusively El Al's.

Another recommendation is for the state to completely pay for the security expenses of Israeli airlines. This will cost $50 million a year, but the committee did not decide whether the funds will come from the state budget or from additional fees to be imposed on passengers.

In addition, the committee recommended opening the old terminal at Ben-Gurion International Airport, Terminal 1, to low-cost flights for 24 hours a day.

The terminal is now closed at night due to noise restrictions. The idea is to offer lower fees for airlines operating out of the old terminal and enable budget airlines to operate in Israel.

Also, it was recommended to open negotiations immediately with the European Union in order to reach an Open Skies agreement to be implemented gradually over three years. It is expected that such a deal would cost Israeli airlines $50-75 million a year in lost revenues, but at the same time travelers would save $70-105 million annually.

Finally, the committee recommended a number of steps to increase tourism to Israel, which would increase revenues from tourism by $100-300 million a year.

El Al trying to coerce workers into signing deal
"I hope we will not have to sell airplanes," said a senior El Al executive yesterday. "The company's situation required significant efficiency measures, and it is important that the employees internalize what is happening," he added, relating to the crisis in labor relations at the airline in recent days.

The executive added that in light of the $44 million loss in 2006, the firm needed 170 workers to leave and had to cut the remaining employees' salaries.

He explained that while labor representatives had agreed to $22 million in cuts, the union has still not signed anything that would allow management to start rehabilitating the airline.
El Al also is threatening to cancel the company's collective labor agreement if the union does not sign soon. Last Monday, El Al told the Histadrut that since there is no direct agreement between the employee representatives and El Al management, the agreement with the Histadrut would not be extended beyond 2007.

The Histadrut's response yesterday was strongly worded. "We will not negotiate with the company's management under any ultimatum. So long as El Al chooses to take unilateral action, such action will face the appropriate response from employee representatives and the Histadrut, with all that this entails."