The cabinet on Sunday approved an Open Skies Agreement with the European Union, even as Israeli carriers grounded their fleets and dozens of airline workers gathered outside the meeting in protest.
The Israeli airlines were concerned that the proposal, which promised to lower prices, broaden the base of flight destinations and boost tourism by liberalizing routes between Israel and the EU over five years, would result in layoffs.
"The open skies reform is good for Israel," Finance Minister Yair Lapid said at the meeting. "It will lead to lower prices and increased competition and won't harm the number of jobs in the economy, but quite the opposite." Lapid cited the Israel Manufacturer's association as saying the agreement could lead to tens of thousands of new jobs being created.
The agreement will only go into effect starting in April 2014, which Lapid said would give the airlines plenty of time to conduct a dialogue with the government over their needs.