El Al Israel Airlines Ltd. (TASE: ELAL) has approved a code sharing agreement with American Airlines, to come into effect on February 1, 2008. The agreement is for two years and will be automatically renewed in one-year increments, unless one of the airlines terminates the agreement.
The agreement will apply on El Al routes between Tel Aviv and New York, Los Angeles, and Miami; El Al routes to Europe, from where American Airlines flights will continue to many US destinations; and El Al's US destinations and follow-on flights to 23 US cities by American Airlines, including Atlanta, Chicago, Dallas, Fort Worth, Orlando, San Francisco, San Diego, and Seattle.
El Al has applied to the Ministry of Transport, and American Airlines has applied to the US Department of Transportation to approve the agreement. Although the US Department of Transportation is expected to approve it, sources in Jerusalem told "Globes" that El Al may face difficulties because Antitrust Authority director general Ronit Kan opposes code sharing on the grounds that it is liable to lead to price-fixing between airlines.
El Al chairman Israel (Izzy) Borovich said that the agreement with American Airlines was the most wide-ranging and comprehensive that El Al had ever signed with another airline. "This agreement reflects El Al's strategy and goal to significantly increase its volume of passenger traffic between North America and Israel and to give the airline a more global dimension."
American Airlines senior VP planning Henry Joiner said that El Al was a world class quality airline that would give American Airlines' passengers more options to reach Tel Aviv.
American Airlines and El Al already have a partnership giving allowing passengers on El Al to record American Airlines frequent flier miles.
For American Airlines, the code sharing agreement with El Al gives it access to the Israeli market, and is a response to the great success of Delta Airlines and Continental Airlines' routes to Tel Aviv from Atlanta and Newark, respectively. Delta Airlines plans to inaugurate a route from JFK as well.
In a separate development, El Al today announced that it will buy four Boeing 737-800 passenger jet for $194 million. One plane will come into service in 2008 and the others in 2009.
Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2007
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