Israel has laid down the basis for a competitive airline industry. Not only has the Government granted international passenger rights to domestic carrier Israir, it has also licensed the Tel Aviv-based air transport company, Cargo Airlines (CAL), to compete fully with El Al on international freight routes.
Against El Al's wishes, Israeli transportation minister Shaul Yahalom granted the CAL licence to begin next December. El Al had wanted a three-year delay to reorganise for new competition.
CAL will need El Al's co-operation to begin its foray into international transport, and Yahalom has warned that if this is not forthcoming, the licence start date will be moved to May instead. CAL will need to continue leasing El Al Boeing 747-400s, although it expects to restructure the lease and take delivery of an unannounced smaller aircraft.
Yahalom is keen to avoid the problems his ministry has encountered after the recent licensing of Israir to carry international passengers.
El Al reacted by expanding the operations of its San Dor charter subsidiary and reduced Israir's potential destinations by acquiring exclusive flight permissions.
Israir chairman Yisrael Harel sent a stinging letter to the head of the Israeli Civil Aviation Authority, Avner Yarkoni. "We applied for flight permission to numerous destinations which were until now, not on the routes of any Israeli carrier. We were turned down and told they were already granted to San Dor. We believe the closing of these destinations to us was not coincidental and suspect a policy of deliberate interference against us," he claimed.
Yarkoni replied: "Your complaint is without basis. El Al does not decide who flies where. We do and we are pursuing an open skies policy and a liberalisation of the whole airline industry."
But El Al has the means to block any potential competitor. Technical facilities for overseas passenger flights are almost entirely concentrated in its hands. In February, the transportation ministry prevailed on El Al to sell its expertise to Israir. El Al's flight planners reluctantly meet Israir pilots 90min before each take-off to provide the necessary weather, fuel and landing data to its fledgling rival.
Source: Airline Business
