"El Al is considering expanding into other activities," El Al Israel Airlines Ltd. (TASE: ELAL) CEO Haim Romano told "Globes". He said that El Al would consider the food, tourism, and aircraft maintenance industries in response to the global economic crisis and the difficulties faced by many companies, airlines included.
Romano did not rule out the acquisition of another airline. Such an acquisition would reportedly enable El Al to join one of the large international airline groups, which will create a number of advantages. Most airlines are now incorporated into large airline conglomerates, but El Al cannot do so because of opposition in many countries.
This situation makes it difficult for El Al to compete because the large airlines use their economies of scale to offer varied follow-on flights and low fares, which El Al cannot meet.
Israeli and EU law currently bans the acquisition and ownership of foreign airlines. The agreement with the EU that will be signed in two years will create flexibility on this point, and allow businesspeople and companies on both sides to bid for large controlling cores in airlines.
At an aviation safety conference hosted by the Israel Air Force's Fisher Brothers Institute For Air And Space Strategic Studies, Romano criticized the government, which he said still owned the golden share in El Al, but showed no responsibility. "We may have to ground our cargo fleet. No one in the government cares. The government should remember that ownership of the golden share imparts responsibility," he said.
Romano also lambasted the government's intention to raise the fees that the Israel Civil Aviation Authority charges airlines. He said that this amounted to an extra $22 million annual expense that El Al would find it difficult to meet.
Commenting on the Ministries of Tourism and Transport's open skies policy, Romano said that they ignored the needs of Israeli airlines. His comments targeted the government's refusal to participate in the security costs of Israeli airlines. "Foreign airlines' flights to Israel have grown by 86% in recent years. They deal mainly with taking Israelis out of the country, not bringing tourists in. We don’t object to the airlines' entry, but we insist that the government preserve our rights."
Published by Globes [online], Israel business news - www.globes-online.com - on November 6, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008