Free competition promises a new era of cheap flights to popular destinations, and a bigger choice of airlines.
By SHELLY PAZEL AL plane 1 248 88(photo credit: Ariel Jerozolimski )
By the summer of 2008, Israelis should be able fly to Paris for just $300, thanks to what has been called the "Open Skies" revolution.
The Open Skies policy, approved recently by the cabinet, promotes free competition in airline travel. It also promises a new era of cheap tickets to popular and new destinations that would allow foreign companies to compete with Israeli airlines.
But so far, like the promise of an affordable summer trip to France by Arkia International, Israeli airlines continue to provide the best deals for travelers.
The Israeli civil aviation industry has been exceptionally busy in the past few months preparing for the Open Skies era. Industry insiders believe the new policy will ultimately benefit most airline passengers, whose options of where to fly, with whom and at what cost, will expand dramatically.
The Open Skies revolution started with a government decision in January, at the recommendation of Transportation Minister Shaul Mofaz, to allow "fair competition."
This was followed by additional foreign carriers receiving permits to begin operating in Israel.
Among these are the British low-cost carrier Thomsonfly, the veteran British carrier bmi, and the French discount carrier New Axis Airways.
The opening of the local market to competition also means that El Al will no longer be the only Israeli airline flying to popular European and American destinations.
That was achieved following the government's recent decision to finance 80 percent of all local carriers' security expenses, and not just El Al's. Until now, the government had financed only half of security expenses.
In return for the security funding, El Al is sharing routes with the smaller Israeli carriers, Arkia and Israir Airlines.
The architects of this revolution, including Mofaz, say it will herald a new era of cheaper plane tickets, a variety of airline companies to choose from, and the arrival of more tourists to Israel.
However, a round trip from Israel to the most popular European destinations - London, Paris or Rome - in one of the older or newer foreign carriers remains expensive in comparison with the parallel offers made by Israeli carriers today.
And this is despite the fact that all airline companies around the globe have been forced to raise their ticket prices due to an increase in fuel prices and the weakening of the US dollar against other currencies.
David Machlev, Arkia International's deputy director-general, said that the revolution would enable Arkia and Israir to both receive the status of a regular airline company, as opposed to a charter carrier whose tickets are less flexible and whose destinations abroad are limited.
"That will lead to a meaningful competition in the pricing of the tickets to destinations that two of the Israeli carriers fly to," he told The Jerusalem Post. "For instance, Arkia plans to offer the Israeli customer a round-trip plane ticket to Paris for the price of $300 by the summer of 2008."
When asked about the promise of a new era of low-cost flights across the board, Machlev said: "The low-cost age means changing the consumption habits of the Israeli client. In the future, the earlier people buy their plane tickets, the less they will pay - unlike the current situation in which people pay less the later they buy a ticket."
Others say that no matter how many outside companies receive permission to operate in Israel in the near future, the policy will make no difference to the average Israeli passenger because the foreign carriers' rates will remain expensive in comparison with the Israeli carriers' prices.
For example, bmi is scheduled to start operating a daily flight in mid-March from Israel to London and Manchester and back, and is selling tickets at the not-so-cheap price of $590 for a round-trip in March.
A similar fare is offered by Thomsonfly - $580 for a round-trip to London between the 6th and 9th of March. The well-established British Airways, on the other hand, offers the same ticket for $664, and provides a better choice of hours.
Israeli airlines offer a much more attractive deal to London.
The same return flight on the same day currently costs $399 on Israir, and if you want to extend your trip to London by one more day, El Al offers a ticket for $349 in its new "Spontaneous" campaign.
Paris, on the other hand, is a route that is still relatively expensive but is likely to benefit from the stiff competition of the Open Skies policy.
Lufthansa currently has the cheapest tickets to Paris ($449 between March 7 and 11); Arkia's best fare is $489 (from March 16 to 20); El Al's top offer was $499 per plane ticket on March 7-11; Turkish Airlines' deal for the same dates was $588, and while Swiss Air's price was $623.
"The foreign carriers that enter this market have no desire to spoil the market for local airline companies," a top official in the Israeli civil aviation industry who asked not to be identified told the Post. "In general, they concentrate their efforts on bringing more tourists from the European bases they operate in.
"These clients consider a plane ticket to Israel at the cost of $500-$700 a fair rate. On the other hand, this market is highly competitive and such things as 'reaching an understanding' among the carriers regarding the plane tickets' prices does not exist."
Asked why bmi was not lowering its fares in line with those of Israeli companies, Aharon Ben-Haim, bmi's sales manager, said that "bmi is not a low-cost airline, bmi provides quality travel at affordable prices, great connections, in modern and comfortable aircraft."
"Every airline has different tariffs varying according to the type of ticket purchased and the numbers of days of stay, and bmi prices range from $564 to $1,514, including taxes, for economy tickets," he said. "Bmi plans to have special promotions in the future, and make weekends in London even more affordable."
Gideon Siterman, the director-general of the Transportation Ministry and the man credited with pushing for the Open Skies policy for the past two years, said the revolution would not be complete so long as a second regular Israeli airline company is not established, and a global agreement is not signed with the European Union.
"It is important to understand that this Open Skies policy has been implemented all over Europe for several years and it has been proven that it increases competition," Siterman told the Post. "As a result, plane tickets are cheaper, the capacity of seats to each destination keeps expanding every year, the service customers receive is better and the tourist infrastructure in these countries is being improved and upgraded constantly."
For the time being, Israel's only regular airline company is El Al, whose management agreed to give up its exclusive rights to many destinations in exchange for the 80% state financing of security expenditures for all Israeli carriers.
In the near future, another Israeli carrier will be chosen, Arkia or Israir, in accordance with its abilities to invest further in its fleet.
"Adding another regular Israeli airline company will enable the operation of two regular carriers to Israel from the countries with which we have signed a bilateral civil aviation agreement, as well as the operation of two Israeli carriers there, too," Siterman said. "For now, we have signed this sort of agreement with five countries: the United Kingdom, Spain, France, Russia and Belgium."
On another level, Israel is striving to reach a civil aviation agreement with the European Union. The first part of that deal, the Horizontal Agreement signed on February 5, allows European airline companies to fly not just from their country of origin but also from any state that is a member of the EU.
The Horizontal Agreement is scheduled to be formally approved in two months by the European Parliament and Israel.
After that, the parties are set to approve a Global Agreement, which would allow Israeli carriers unlimited flights between EU member states.
"This sort of agreement was reached [by the EU] with Morocco," Siterman said. "It took them four years to reach it since they had to prepare in advance and to develop a tourist infrastructure that would suit luxury and budget travelers, meaning the burden is also on the tourist industry in the country to have enough hotel rooms, restaurants, appropriate roads and road signs, affordable tourist sites and more."
So where is the competition?
El Al commerce chief Rami Levy said foreign carriers fight for Israeli passengers when it comes to "the sixth freedom" - the right to carry passengers or cargo from a second country to a third country with a stop in one's own country.
"The foreign carriers compete for the Israeli client too, but their prices are still not so attractive in comparison to the Israelis," Levy said. "However, foreign carriers offer the Israeli customer discounted prices on flights from point to point - much cheaper than the prices the residents of their countries of origins receive - and this is where they concentrate their efforts to 'steal' some of our clients."
All agree that travel agents will be forced to reinvent themselves if they want to survive in this new era in which independent travelers designing their own vacations will become a more common type of client.
Eyal Shtark, Aladin Travel's marketing director, said, "As early as the summer of 2008, Israeli passengers will be able to plan their vacation independently, and book a flight and a hotel room via the Internet in accordance with their needs, budget, desires and timetable, without being limited to a closed vacation deal on specific dates, and at specific hotels and prices."
Avner Lash, Daka90's deputy director-general, said it was too soon to eulogize "vacation deals" and that some people would still prefer to purchase an all-inclusive package.
"In addition, the independent traveler will not be able to get the same deals we offer, because we have high-volume work with some companies, so the prices we offer are more attractive," Lash said. "Besides, we are constantly searching for the best deals, and the product we offer is with no doubt the best value for the client's money."
Siterman stressed that the entire Open Skies revolution was, in the final analysis, directed at helping the customer.
"All the efforts we put in are for the benefit of the Israeli client and not for the airline companies," he said. "The struggle is for more opportunities, connections, flexibility and seats that will ultimately influence the quality of the service and the prices."
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