Arkia Airlines Ltd. and Israir Airlines and Tourism Ltd. may be forced to halt their international flights in the summer.
El Al Israel Airlines Ltd. (TASE:ELAL), which provides security services for Arkia and Israir, is demanding a government unrestricted indemnity to cover any lawsuits related to security incidents.
At present El Al provides security screening and services for both its own flights and those of Arkia and Israir. The government pays 60% of these costs and the airlines pay the other 40%. El Al has frequently protested that it should not have to provide these services to its competitors and the Ministry of Transport is seeking an alternative arrangement.
Arkia and Israir are not prepared to grant El Al such an indemnity and agree with El Al that the government should do so. However, there are no indications that the government intends providing such an indemnity and as it stands there is a reasonable likelihood that Arkia and Israir may be compelled to stop flying overseas.
Published by Globes [online], Israel business news - www.globes-online.com - on May 13, 2010
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