El Al withdraws appeal on monopoly ruling [pg. 17]

By AVI KRAWITZ
August 9, 2006 07:17
1 minute read.

El Al withdrew its appeal to the High Court of Justice of a ruling declaring the carrier a monopoly on its routes to Johannesburg, Honk Kong, Bangkok and Bombay, instead opting to rely on a pending decision of the Antitrust Authority Court regarding the matter. "We have withdrawn our case but have kept our right to renew the appeal if the results of the antitrust process do not turn out in our favor," El Al said in a statement Tuesday explaining its decision. Antitrust Authority chief economist and deputy general director Merav Beeri said in response that the withdrawal was a sign of weakness in the El Al case and that there was very little chance the authority appeal would play out in the airline's favor. In October, El Al received notification from the Antitrust Authority declaring it a monopoly on the four routes on the basis that it enjoyed over 50 percent market share on these destinations and was the only scheduled carrier flying directly to those locations. El Al appealed the ruling, claiming discrimination since there were some 18 foreign airlines at the time that would be affected by a similar ruling were it to be applied to them. Beeri explained that if these companies were found to be monopolies the Antitrust Authority would say so. The more pertinent reasoning for the ruling, she noted, showed that El Al has an advantage over other airlines because Tel Aviv is its hub and it, therefore, can sell packages to the Israeli consumer using its network of connecting flights which others cannot. "We want to give warning to monopolies that they shouldn't be able to take advantage of their position," Beeri said. "Furthermore, El Al has agreements with the four routes in question that their respective airlines should not fly to Tel Aviv and pays them for it. It's really a cartel." As a monopoly, El Al will be limited in various aspects of marketing the routes, Beeri explained without expounding on its full implications. El Al, which is facing increasing competition from new comers to the Tel Aviv route and expanded operations from many foreign airlines on the route, has issued a profit warning for the year.


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