July 31: Open Skies

By the end of the five-year period, there is to be full competition on all air routes between Israel and the EU.

Elal plane 311 (photo credit: Courtesy)
Elal plane 311
(photo credit: Courtesy)
After more than three years of negotiations, Israel and the European Union signed what was termed a historic “Open Skies” aviation agreement on Monday.
The agreement, which promises to increase competition among airlines, sharply reduce air fares and boost European tourism to Israel, is a welcome development. But it must be implemented with caution, to minimize the harmful effects it could have on the local airline industry.
The deal was inked by the head of Israel’s Civil Aviation Authority, Giora Rom, and the European Commission’s senior policy officer, Klaus Geil. It still needs the approval of Israeli and EU institutions, including the cabinet, the Knesset and the European Parliament.
Gradual implementation is due to begin on April 1, 2013, and take some five years to complete. This is aimed at allowing Israeli airlines, particularly El Al, to prepare for serious competition.
Tourism Minister Stas Meseznikov praised the agreement, calling it “an essential move that will catapult tourism to Israel by hundreds of thousands of tourists and bring about a decrease in fares for the Israeli consumer as well.”
But he also warned that “the state must find a way to ensure support for Israeli airlines within the new agreement.”
Transportation Minister Israel Katz said he was convinced that the agreement would result in lower air fares and ultimately benefit local airline companies.
“I believe in Israeli airline managers’ abilities to lead their companies to great success even in an open-market situation, which is beneficial for the market as a whole,” Katz said. “I predict a significant drop in prices and I believe that this deal will increase incoming tourism to Israel, create thousands of new jobs for Israelis and open new destinations.”
Israel and the EU have been discussing the deal since the end of 2008. A memorandum of understanding was signed in March, but Katz delayed the final agreement after objections were raised that it could hurt the local airline industry.
El Al, for example, argued that the agreement threatened to put it and other local carriers out of business.
“The company, together with other Israeli airline companies, expressed its position to the Civil Aviation Authority and the transportation minister that before signing the Open Skies agreement, a certain number of conditions must be met, which have not yet been and are vital, according to the company, to enable Israeli airlines to compete on a fair and equal basis,” El Al said in a statement.
The Knesset Economics Committee proposed that the government conduct an economic study to determine the effects of the agreement on Israeli airlines, but this was apparently not done.
European carriers, however, welcomed the move. Easy- Jet, for example, issued a statement in Hebrew saying it was now planning to expand flights between Israel and various destinations in Europe.
“At this stage, we call on Israel and the EU to implement the Open Skies agreement so that we can increase flights and the number of visitors to Israel,” it said.
The pact will replace bilateral agreements between Israel and each EU nation that specify exactly which airlines may fly to every destination in Europe and limit the frequency of flights.
Under the deal, seven new weekly flight options will be introduced to each European destination annually, while several European airports with heavy traffic will add only three options a year.
By the end of the five-year period, there is to be full competition on all air routes between Israel and the EU, with every airline permitted to fly to any destination as many times as it wants.
Sources in the airline industry said the EU had exerted diplomatic pressure on Israel to sign the agreement as soon as possible. The EU is Israel’s most popular and important destination for flights, with almost 60 percent of all Israeli international passenger flights going to 16 EU member states.
Tuesday would have been the 100th birthday of Milton Friedman, the American Jewish economist who became the supreme advocate of a free-market economy and who died in 2006.
We hope that the new Open Skies agreement, in keeping with Friedman’s philosophy, paves the way for more flights, more tourists and lower fares, while at the same time meeting the conditions set by El Al and other Israeli airlines to avoid harming local airline companies at the expense of their European counterparts.