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Two and a half years after the privatization of El Al Israel Airlines, Transportation Minister Meir Sheetrit found fault with a key aspect of the sale which limited competition by domestic carriers Israir and Arkia on scheduled international routes.
"It was a horrible mistake on the part of the Treasury, which wanted 'open skies,' but tied our hands," Sheetrit told The Jerusalem Post in an interview.
"For [the Finance Ministry] it was so important to privatize El Al that they weren't thinking about the [national] interest. Israel's true interest is... to create competition between the Israeli companies, to give Israeli companies the possibility to compete with each other and bring down prices. Then Israelis will benefit, and those companies will grow as well," he said.
Under then finance minister Binyamin Netanyahu, in May 2003 the Finance Ministry and the Government Companies Authority agreed to the demand by the El Al workers' union to block Israel's aviation sector to domestic competition. The transportation minister would be free to assign national carrier rights to another airline - opening El Al's hold on scheduled routes to competition - only when air passenger traffic to Israel rises to 10.7 million annually.
"We're waiting. This year there are only eight million. When will it be [10.7 million]?" Sheetrit said.
A route can be opened to domestic competition if El Al's share falls to less than 30% of scheduled passenger traffic on a given route (not including charters), or at the discretion of the transportation minister, the agreement also stated.
Sheetrit's comments come as both Israir and Arkia await a decision by Tourism Minister Avraham Hirschson regarding Israir's request to upgrade its charter services to New York into scheduled services, thus competing head on with El Al on its most important route. Sheetrit had transferred authority on the matter to quell rumors of a conflict of interest related to his wife's public-relations work for a company belonging to Nochi Dankner, who is also one of Israir's owners. Hirschson is expected to announce his decision next week.
"He wants to 'open the skies'; let him open them," said Sheetrit.
El Al has held a monopoly among Israeli carriers on flights to New York since it began scheduled flights to the Big Apple in 1952. Currently, the only other airline operating direct, scheduled flights between New York and Tel Aviv is Houston, Texas-based Continental Airlines. However, due to a bilateral Israel-US agreement, any US carrier may operate flights to and from Israel.
Sheetrit also rejected the idea of an "open skies" policy, allowing free competition on flights to Israel.
"There is no country in the world with 'open skies.' There is no such thing. This whole bluff being sold by the Tourism Ministry is just meant to cover up their shame in the field of tourism," Sheetrit charged, citing examples of countries without open-sky agreements that attract millions of tourists annually.
"I'm protecting the interests of the State of Israel - the interests of Israeli aviation, and of Israeli aviation workers. I won't allow Israeli aviation to be eliminated. If I were to want 'open skies,' all Israeli aviation companies would be eliminated within one year. Then only the foreign [carriers] would remain ... and there would be no more competition," he said.
"In the whole world it is accepted to protect the [national] interest of flight rights, conducts negotiations with any country that desires to [have its carrier fly to that country], on the basis of symmetry, with each country protecting its interests. I see what the other countries in Europe and the US are doing to El Al, Israir and Arkia, and these are difficult conditions. . So why should I give in on this asset? For the benefit of whom? To make someone happy in the Tourism Ministry?"
Sheetrit said he had invited low-cost airlines to start flying to Israel, to allow round-trip travel to Europe for $150, but that they have yet to act on the offer.
"And there's no limit on charters. Aren't charters 'low cost'? Who's stopping them?" he said.
Sheetrit stressed nonetheless that he canceled a decision by his predecessor as transportation minister, Avigdor Lieberman, to cut flights by leading European carriers, such as Lufthansa, Alitalia and Swiss, by half.
"I came to an agreement with [the foreign carriers]. I didn't cut one flight. I said 'Let's freeze the situation as it is, and whoever has a particular request for a truly large addition of passengers, let him show us the numbers [indicating demand], and we'll give him [the additional flights].'"
He did not rule out allowing Lufthansa to add flights in April once the freeze expires, pointing to an agreement with Austrian Airlines to add two more flights weekly this summer.
"I'm for encouraging competition. I'm for bringing down prices for Israelis. But we must do this intelligently, without throwing out the baby with the bath water."
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