Ministry of Finance Accountant General Dr. Yaron Zalika has selected Italy’s national air carrier Alitalia as the airline for public sector employees traveling abroad on official business. An agreement was signed following extended negotiations between Alitalia representatives and Government Procurements Administration director Avi Dor, under which Alitalia will provide discounts and benefits to public sector employees who use the airline when traveling overseas. Dor stated that the agreement was a further stage in the policy of signing framework agreements with key airlines used by public sector employees traveling abroad, with a view to reducing air fares.
Officials at the Office of the Accountant General believe that once complete, the move will save the government at least NIS 10 million in air fares for public sector employees traveling overseas. Under the agreement with Alitalia, the state will receive discounts and numerous benefits such as a special price list for tickets, flight rescheduling free of charge, a special tariff for excess baggage weight and other services. The agreement with Alitalia is valid for a year with an option to extend for a further two years.
The agreement with Alitalia effectively voids the monopoly that El Al Israel Airlines (TASE: ELAL) had over transportation services for public sector employees traveling abroad on official business. According to Dor, the state is negotiating with additional airlines, with more framework agreements likely to be signed in the coming months. Dor added that he intends in the coming weeks to finalize the reform of government engagements with foreign transportation service providers.
Since February, Zalika has warned on three occasions that he intended to strip El Al of its monopoly. Despite this, El Al only learned of the agreement with Alitalia after it was asked for a response by “Globes.”
El Al: Ministry of Finance conduct is most peculiar
El Al CEO Haim Romano responded to the news of the selection of Alitalia and said that “The Ministry of Finance’s conduct is most peculiar.” He claimed that the El Al has an agreement with the Office of the Accountant General from March this year, which extended the duration of the previous agreement according to which El Al would continue to fly public sector employees. Despite this, the Ministry has invited bids from other airlines, he said.
The Ministry of Finance stressed that government ministries are not obliged to buy tickets solely from Alitalia, and, if they wish, they can choose to buy their tickets from other airlines offering lower prices or more convenient flight schedules.
Romano said that the Ministry of Finance’s conduct was even more incomprehensible in light of the recent war in which El Al pilots shared their time between flying civil aircraft and military service. “El Al flies the flag of Israel and one can only be astounded by the Ministry of Finance’s failure to honor it. I would have hoped that it would have adopted a more nationalist approach, and certainly not to make an issue out of this.”
He added that he was convinced that had it found itself in a similar situation, the Italian government would have acted differently. “A week ago Prime Minister Ehud Olmert said we were the country’s national airline. A few days later, the Ministry of Finance gives credit to Italy’s national airline instead. If that isn’t ridiculous, what is?”
Published by Globes [online], Israel business news - www.globes.co.il - on August 22, 2006
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