Prime Minister Benjamin Netanyahu's cabinet on Sunday approved an Open Skies agreement that will gradually grant competition to foreign airlines by increasing the number of flights and destinations over five years.
Employees from the Israeli airlines El Al, Arkia and Israir went on strike at 5 A.M. in anticipation of the cabinet vote, and protesters picketed outside the government compound, with one demonstrator attempting to break in, Now that the move has been approved, the airlines must decide how to proceed.
The El Al stock dropped 10 percent on Sunday in light of the airline's strike.
Government ministers overwhelmingly approved the agreement, with 19 voting in favor and only three -- Ministers Amir Peretz (Hatnuah), Sofa Landver (Yisrael Beiteinu) and Yitzhak Aharonovitch (Yisrael Beiteinu) – against. A third Yisrael Beiteinu minister, Yair Shamir, abstained to avoid the appearance of conflict of interest, as he formerly served as chairman of El Al.
The agreement was approved subject to a comprehensive aviation policy reform, including benefits for Israeli airlines, such as supplements for security budgets and potential cooperation among the Israeli firms – a move that had been opposed by the Israel Antitrust Authority but may now be authorized. In addition, there may also be increased cooperation among foreign airlines in terms of code-sharing agreements, meaning that more than one carrier share the same flight. Israeli airlines, in return, would have to implement additional efficiency measures.
Steps were taken ahead of the strike to minimize disruption: All incoming flights landed as usual overnight, with some 5,000 passengers entering Israel between midnight and 5 A.M. Flight traffic for foreign airlines continued without disruption. The carriers moved up most departures, with the airport opening for takeoff at 4 A.M., so that outgoing passengers could leave Israel.
Following the decision to open the airport at 4 A.M., some 28 flights operated by Israeli airlines departed by 5 A.M. carrying some 4,500 passengers. The last flight whose departure time was moved up was No. 007, which was supposed to depart for New York at 10:40 A.M. but left at 1:10 A.M. instead.
El Al canceled seven flights that were expected to depart for Europe on Monday: No. 393 to Barcelona; No. 315 to London; No. 337 to Amsterdam; No. 611 to Moscow; No. 321 to Marseilles; No. 573 to Bucharest; and No. 365 to Budapest. Flight No. 319 to Paris was also canceled but its passengers were reassigned to a flight that departed early Sunday morning.
The deal, reached by Israeli and EU negotiators in July 2012, needs the cabinet's approval for the ministers of foreign affairs, transportation and infrastructure to sign. The agreement stemmed from a cabinet decision in September 2006.
The five-year implementation period is meant to allow Israeli airlines to prepare for the increased competition. The agreement includes Israeli compliance with certain European standards of safety, the environment, consumer protection and air-traffic control, which would ensure the improvement of Israeli standards.
The agreement has already won the support of the Foreign Ministry, the Justice Ministry, the Tourism Ministry, the Prime Minister's Office and the Antitrust Authority. Prime Minister Benjamin Netanyahu will give his opinion in Sunday's meeting.
A source at the Israel Airports Authority said its workers would not join the strike, so for the time being no special arrangements were being made at Ben-Gurion International Airport.
Transportation minister: Enough with the threats
"The agreement will be presented to the cabinet no matter what. Those who threaten strikes threaten themselves," Katz said after his meeting with Lapid, noting that passengers affected by strikes might switch to foreign airlines.
"Enough already with committees and threats," Katz added, saying that the agreement could not be changed, but negotiations could still take place with the Histadrut labor federation over conditions.
About 60 employees of Israeli airlines protested Friday morning, one group at Lapid's house and one at Katz's in Kfar Ahim. Lapid came out to talk to the demonstrators and invited the workers' committee leader to meet with him at his home.
"The finance minister understands the airlines' needs," Asher Edry, the El Al workers committee chairman, said after the meeting. "We favor competition but we need protection so we aren't taken apart... Minister Katz lied to us before the election and isn't implementing what was signed. Lapid said he would check matters with Katz and we'd get answers. The announcement about the strike still stands."
The proposal requires the cabinet's approval for an NIS 5 million increase in the government's share in security costs for the Israeli airlines, beginning on the first day of the 2015 summer season and until the last day of the 2016-17 winter sesion. The cabinet will revisit funding for security expenses ahead of the 2017 summer season.
The proposal notes that 60 percent of international passenger traffic is on regular flights to and from EU countries, and that the government concluded the agreement with the EU after more than three years of talks. The July 30, 2012 memorandum was then signed. The EU's council of transportation ministers approved the deal on December 20, 2012.
The proposal states that the Israeli airlines have been involved in talks with the EU at every stage, as well as in the draft agreements and position papers, seminars in European law and discussions on Israeli aviation policy.
International studies have shown the economic benefits of such aviation agreements. Among EU countries, between 1992 and 2000 Open Skies deals increased by 74 percent the number of direct routes. The number of international routes in the EU rose in that period by 256 percent. At the same time, prices plummeted 34 percent in real terms and passenger travel increased 9 percent annually from 1998 to 2002, compared with 4.8 percent from 1990 to 1994.
Katz noted that the agreement would create thousands of new jobs for Israelis. "I'm sure the heads of Israeli airlines can lead their companies to prosperity and success even in a competitive environment, which benefits the entire economy," he said.
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