Israel will pay 97.5 percent of El Al's security costs in order to settle a strike over the country's new "open skies" agreement with the European Union, Haaretz reported. The government previously paid 80 percent of security costs, saddling El Al with an estimated $30 million bill to keep passengers safe.
The agreement with the European Union would open new routes between Tel Aviv and members of the Union, lowering the cost of flights by foreign carriers, to the disadvantage of Israel's three airlines: El Al, Arkia and Israir.
The general airport strike by the Histadrut labor union was called for Tuesday after Israel's Cabinet on Sunday approved the agreement Employees of the three airlines went on strike over the deal hours before it was approved.Dozens of flights by the three airlines were moved up to avoid the strike deadline.
The European-Mediterranean Sea aviation agreement approved Sunday allows European airlines to increase their flights to Israel for five years, which could substantially decrease the costs of airline tickets for Israeli travelers to Europe.
The Histadrut says the deal could mean thousands of layoffs by the three airlines. Employees of the three airlines picketed outside the Knesset during the vote.
"The goal of the reform that we approved today is to lower the prices of flights to and from Israel and to increase incoming tourism," Prime Minister Benjamin Netanyahu said Sunday following the agreement's passage.
El Al stock dropped 7 percent on Sunday following the start of the strike and the passage of the agreement.
The agreement was signed initially by the Israeli Civil Aviation Authority and the European Commission last July following three years of negotiations.
Fifty-three takeoffs and 38 landings, affecting 15,591 passengers, were scheduled on the three Israeli airlines for Sunday at Ben Gurion Airport, Haaretz reported, citing the Israel Airports Authority.
Israel's Channel 10 on Saturday night reported on an internal Transportation Ministry report warning that El Al could collapse in the wake of an open skies agreement.
In a statement sent to The Jewish Week, El Al said the agreement places "Israeli aviation in unfair competition with European carriers and is weakening the ability to compete equally. Only when the government resolves these issues can EL AL and the other Israeli carriers compete fairly within the framework of the Open Skies Policy."
The airline noted that it has been excluded from a large international airline alliance because of "obvious political reasons," meaning opposition to Israel's right to exist.
"The fact that we are not able to join an alliance severely restricts our global operations and destinations served. An airline alliance can be compared to having one airline with thousands of aircraft, whereby all Israeli carriers (including EL AL) have a combined total of less than 50 aircraft.
In addition, the anti-trust laws in Israel are much stricter than in European countries, making it almost impossible for EL AL to maintain codeshare agreements with the same flexibility enjoyed by European carriers.
In addition, El Al said security restrictions prevent El Al from freely operating in some countries whose airlines travel to Israel. And it is saddled with close to $30 million in security costs, while competitors' security costs are paid by their government.