As Passover slowly ebbs into its remaining days, it is worth noting that on three specific Jewish holidays — Passover, Sukkot, and Shavuot — Jewish law dictates that one should pilgrimage to the city of Jerusalem. For many contemporary Jews, a visit to Israel extends beyond religious holidays to summer vacations, family visits, or youth-touring groups. However, all trips to Israel carry the same underlying burdens: costs. For prospective tourists, the airfare alone is costly enough to deter a vacation. In a meaningful step to counter the prohibitive costs of transportation to Israel, the Israeli government recently entered into an agreement with the European Union, known as the Open-Skies Agreement.
As designed, the Open-Skies agreement is a multilateral platform that seeks to liberalize the international air transportation industry. The agreement employs market-based competitive forces — namely free markets and equal access for carriers to airports — to reduce passenger costs, create more options and allow for greater efficiency in air transportation. After a contentious debate, Israel agreed to the controversial terms of the deal with the European Union in June 2013 that will gradually be phased in until full implementation in 2018, according to the Jerusalem Post. Until now, the Israeli government has placed heavy regulations on the airlines operating in Israel and the Israeli air industry has been dominated for decades by the partly government-owned airline, El Al.
Among the opponents to the agreement, stands El Al, whose profits would prove increasingly vulnerable to the downward pressure on consumer prices posed by the agreement. In a report issued by The Economist, El Al’s added security measures and observance of the Sabbath along with religious holidays drastically increases its operating costs. In fact, in anticipation of the coming cheaper European carriers, El Al has launched an offshoot, price-competitive carrier UP. Israeli air carriers have also recently inked a deal with the Israeli government that increases government subsidies for security measures, that requires the government to cover 97.5% of the cost of security from the original 70%. While Israeli airlines have lambasted the agreement as an irresponsible measure that puts tens of thousands of jobs in jeopardy, others have noted the potential economic windfall to the Israeli economy and travelers alike.
Economic growth and change often come with defined winners and losers. Inasmuch as Israeli airlines may struggle to remain competitive with the influx of new commercial flights, the upside of the agreement will likely materialize in tangible benefits. Certain Israeli economic sectors have stood out prominently in recent years, especially the high-tech industry; however, industries such as tourism have remained constant and important sources of growth in the Israeli economy. According to Ynetnews, more than 3.5 million tourists and visitors entered Israel in 2013, 73% of which arrived by air. Moreover, the report also concluded that tourism netted the Israeli economy NIS 40 billion ($11.5 billion). With this data in mind, it stands to reason that any significant decrease in the cost of airfare to and from Israel will change the landscape of Israel’s tourist industry for the better.
In fact, several measures already point to an emerging growth in European-Israeli travel. In an effort to anticipate the incoming foreign carriers, Israeli airlines have significantly expanded their routes, according to a Haaretz report. Compared to last year, El Al and Israir offer 15% and 30% more routes respectively. In the bigger picture, the Open-Skies agreement is but a single measure in an attempt to liberalize the Israeli economy. The final picture remains obscured, and Israeli politicians walk a precarious line in dealing with both Israel’s stubbornly high poverty rate and economic growth. Ultimately, this agreement helps to put Israel’s political climate in perspective. At a time when many feel Israel has become increasingly isolated and marginalized on the international stage, the agreement stands as a reminder that the data suggests otherwise. Israel continues to be integrated further and further into the global economy.
