Minister of Transport Israel Katz today gave El Al Israel Airlines Ltd. (TASE: ELAL) a permit to make scheduled flights between Ben Gurion Airport and Eilat for the first time. The decision came after the Israel Civil Aviation Authority held a new hearing on El Al's request to make the domestic flights.
Civil Aviation Authority director general Giora Rom rejected El Al's request for a permit for the route several months ago, after consulting with the relevant parties. He said that the route was saturated, and that El Al flights on the route was liable to cause serious financial harm to Arkia Airlines Ltd. and Israir Airlines and Tourism Ltd. The Civil Aviation Authority said at the time, "There is no room at this time for additional scheduled carries in domestic aviation."
Despite the rejection, El Al requested a new hearing, which the Civil Aviation Authority began a few weeks ago, together with the Antitrust Authority and Ministry of Tourism. At the conclusion of the hearing, the Civil Aviation Authority decided to adopt the Ministry of Transport's policy to increase competition in domestic aviation and to allow El Al to operate as another scheduled carrier on the Eilat route.
Katz said that the appointment of El Al as the third scheduled airline on the Eilat route should lower fares and help realize the potential demand on the route. Currently, the 20 scheduled daily flights on the Ben Gurion-Eilat route carry one million passengers a year.
"The liberalization in aviation led by the Ministry of Transport which will give more airlines the Eilat route could lead to lower fares and increase Eilat and Israel's exposure as a tourist destination," Katz added.
Katz said that granting El Al a permit to fly to Eilat and opening more international destinations to competition will be made in consultation with Israel's airlines and in cooperation with all the relevant parties. He noted that the start of El Al's flights and setting of seat capacity would be decided after though staff work by the Civil Aviation Authority.
Katz said that in parallel with granting El Al a permit to fly to Eilat, he would open more international destinations to competition, with the goal of allowing Arkia and Israir to expand their international operations in line with recommendations by the Civil Aviation Authority,
Even before the new hearing for El AL, Arkia and Israir said that they would appeal to the courts if El Al was granted a permit to fly to Eilat.
El Al said that it welcomed the recommendation by the Civil Aviation Authority director general and the decision by the minister of transport to appoint it a scheduled airline to Eilat, alongside Arkia and Israir. It added that the decision to allow El Al to make scheduled domestic flights was good news for consumers in general and Eilat residents in particular. "The permit will strengthen incoming tourism to Israel and domestic tourism. It will lead to the expected growth in tourism to Eilat and contribute toward improving current service and timetables."
Published by Globes [online], Israel business news - www.globes-online.com - on August 24, 2009
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