Low-cost airlines greet the new competition enthusiastically, but scheduled carriers take a wait-and-see approach.
The representatives of European airlines in Israel are satisfied. After years of talks and threats, the Open Skies agreement with the EU became a done deal yesterday, and they are now ready to take over the Israeli market. Not every airline is planning at this stage to increase the number of seats on their Tel Aviv routes, but are waiting to see how the market will respond when the agreement comes into effect in April 2014.
One airline eagerly waiting for the Open Skies agreement to come into effect is Air Berlin, which carried 171,000 passengers on its Tel Aviv route in 2012. "The Open Skies agreement is good for us, because we can fly to Israel as often as we want, and the restrictions on the number of weekly flights will be lifted," Air Berlin's Israeli representative Moni Bar told "Globes" today.
Bar said that when the agreement comes into effect, Air Berlin will initially increase its weekly flights between Tel Aviv and Berlin, Munich, Cologne, and Dusseldorf from 15 to 22, as well as flights on the Tel Aviv-Vienna route by affiliate, Niki. "In the second stage, depending on market demand, we may increase the number of weekly flights to 30," he added.
In contrast to Air Berlin, British Airways, which already has the right to increase the number of seats on its Tel Aviv route under a bilateral agreement between Israel and the UK, has no plans to do so at this time. "Although British Airways is a big airline, its resources are still limited in terms of its fleet of planes. We have no redundant planes, and to increase the number of seats and flights to Israel, we'd have to forego another route," said British Airways Israel manager Yael Katan. British Airways carried 260,000 passengers in 2012 on its 20 weekly flights between Tel Aviv and London. She added that, in view of the expected increase in the number of low-cost carriers which will fly to Israel under Open Skies, British Airways would review the worthwhileness of its Tel Aviv route.
Swiss International Airlines Israel manager Avner Gordon made similar remarks, saying, "Swiss is already unable to fill its quota under the bilateral agreement. The airline currently operates 14 weekly flights, and could add two more flights without seeking permission from anyone, but it will not do so out of consideration of plane use and availability." He said that Swiss, which carried 280,000 passengers on its Tel Aviv route in 2012, has no plans to add flights under the Open Skies agreement.
Lufthansa's Israeli representative said that was considering increasing flights to Israel under Open Skies Lufthansa carried 428,000 passengers between Tel Aviv and German cities in 2012. It operates 23 weekly flights to Tel Aviv: fourteen from Frankfurt, five from Munich, and two each from Dusseldorf and Berlin. "Lufthansa is undergoing restructuring, including a review of its flight operations between German cities and Israel and an examination of the new opportunities for expanding operations with the Open Skies agreement comes into effect. Lufthansa consistently supports liberalization in the aviation market," it said.
Fears from low-cost carriers
Low-cost airlines will be the main beneficiaries of the Open Skies agreement with the EU, although they will face restrictions, which will gradually be lifted over five years. easyJet UK commercial manager Hugh Aitken said, "The airline welcomes the Israeli government's decision to approve the agreement, and sees itself as Israel's partner in the long term." easyJet carried 273,000 passengers on its Tel Aviv routes in 2012, and has said that it wants to expand its Israeli service to more cities in Europe.
Off the record, some representatives of European scheduled carriers told "Globes" that they fear that low-cost carriers will gain market share in the Israeli market when the restrictions are lifted. "We're not afraid because our fares are already competitive. I can understand why other scheduled carriers, most of which are fat and inefficient, fear this situation. Low cost only threatens airlines which charge very high fares, which is not us," said one representative, adding, "If competition in the local market increases, and causes fares to fall, we, like our competitors, will lower fares."
Published by Globes [online], Israel business news - www.globes-online.com - on April 23, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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