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Will Open Skies Put El Al Out of Business?

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A Boeing 707 of El Al at Zurich International Airport, Switzerland.
A Boeing 707 of El Al at Zurich International Airport, Switzerland.
Open skies, smiling at me. Nothing but open skies…

While most of us were enjoying a lazy Sunday, the Israeli government was busy approving an Open Skies agreement with the European Union on Sunday, April 21.

The new aviation policy puts an end to the monopoly over Israeli skies held by the country’s national airlines. Naturally chaos ensued the morning before the cabinet vote, as employees from Israeli airlines such as El Al, Arkia and Israir went on strike in the wee hours of Sunday morning in an attempt to prevent Open Skies from taking effect. There were also protesters staked outside the Knesset building, with some overly ambitious ones attempting to break into the building.

In light of the government’s decision, the El Al control center had informed the Airports Authority that it would go on strike, canceling all departing flights until 9 p.m. The two day strike ended on Monday, April 22, as the Israeli government and El Al forged a deal to help further cover 97.5% of the airline’s security costs (the government currently covers a staggering 80%), and will help the flag carrier be competitive in an open-skies deal with Europe.

So then comes the question of why a renowned national staple such as El Al would turn down the potential to greatly benefit the Israeli society.

Analysts are attributing El Al’s negative response to the Open Skies policy to the company’s fear for its own future. Following the decision, the airline not only has to compete with stronger carriers, it’s saddled with a $33 million annual security bill, which could possibly put it out of business.

Not so, according to a company press release obtained by the Jewish Voice, which reads:

“First and foremost, EL AL is not against the open skies agreement… [But] over the years, competition has grown tremendously so that today dozens of airlines take off and land in Israel at Ben Gurion International Airport. [As a result] most carriers flying to Israel are part of a large international airline alliance. EL AL has been trying to become a member, but for obvious political reasons, has not been accepted. The fact that we are not able to join an alliance severely restricts our global operations and destinations served.”

In other words: money. El Al is scared of losing revenue. But perhaps what they lack in travel accommodations they can make up for in other ways… such as newer planes and customer facilities, and if you’ve recently been on an El Al flight then you know that in terms of amenities, the airline leaves a lot to be desired.

Ultimately, the most informed observers believe that Open Skies is a good thing. It promises lower prices, a broader base of flight destinations, and a boost in tourism by loosening restriction routes between Israel and the European Union over the next five year span. Rather than complain about the policy, perhaps El Al could simply improve on their current amenities. How about giving other airlines something to compete with, such as newer TV sets (a la Turkish Airlines), cleaner magazine pouches and a wider food and drink menu (a la Virgin Airlines), and more leg space (a la JetBlue).

Which, according to Israeli Prime Minister Benjamin Netanyahu, is the whole point:

“The goal of the reform that we approved today is to lower the prices of flights to and from Israel and to increase incoming tourism,” he said. “I commend Finance Minister Lapid and Transportation Minister Katz for working to pass this reform, which has been discussed for many years. We will continue to advance reforms to lower the cost of living and increase the efficiency of services to Israeli citizens.”

The El Al stock dropped 10 percent on Sunday in light of the airline’s strike. Meanwhile, El Al spokesperson Sheryl Stein did not directly respond to our request for comment, opting to send us the aforementioned press release instead.

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