As calls for an accelerated deregulation of the aviation industry persist on both a government level and in the private sector, the Hebrew University School of Business Administration hosted an afternoon seminar Sunday to present an academic model on which the government could base its 'open skies' policy.
The open skies policy, which sets the capacity and frequency boundaries to which airlines can fly to the country, has been a controversial subject over the past year following the privatization of El Al in December, 2004, and as tourist numbers have increased. Since the privatization, the industry has kept a close watch on the extent to which the government will allow competition to the national flag carrier.
"A competitive environment exists in Israeli aviation," said Dani Morag, chief economist for the Israel Civil Aviation Authority (CAA), in his presentation Sunday. "This does not mean, however, that a liberalization process could not contribute to increasing competition here."
Morag would not comment to The Jerusalem Post on how the market could be further deregulated or steps which the CAA has taken to implement such a process.
The CAA is responsible for licensing in the aviation sector and giving recommendations to the Transportation Ministry, which has the final say on policy. Following an attempt by the Tourism Ministry earlier in the year to have a stronger say in the open skies policy, an inter-ministerial committee was formed to make recommendations on airlines' scheduling applications. With this reform, Transportation Minister Meir Sheetrit must now consult with Tourism Minister Avraham Hirschson before approving additional routes.
Prevalent on the current open skies agenda are requests by various foreign airlines to increase their capacities on respective Tel Aviv routes, and new carriers, such as charter company Israir, to operate scheduled flights to New York, thus becoming the first local carrier to operate in competition to El Al on the direct Tel Aviv - New York route.
In bringing academic thought to the debate, Prof. William Swan, former chief economist at Boeing Corp., opened the workshop presenting the growth points which influence competition in the market.
"While air travel growth has been met by increased frequencies and non-stop flying, airlines are looking to start new routes as means of gaining competitive edge," he said.
With the recent mergers of major airlines in the US and Europe, and the development of airline alliances which offer shared benefits to customers of member companies, Dr. Nicole Adler of the Hebrew University presented a model to explain the dynamics of these trends in the industry and the effect they have on competition.
"It is essential that governments and regulators understand the effects of such changes in the industry when setting an open skies policy," she said. "They need to know what open skies means."
The presentations by Swan, Adler and Morag were followed by a panel discussion on the local open skies policy. The panel consisted of Israir CEO Sabina Biran, Swiss International Air Lines country manager Avner Gordon, British Airways country manager Yael Katan and El Al VP of trade and aviation relations Yoav Levi.