Israel’s Deputy Antitrust Commissioner Uri Schwartz has rejected the application from Israir Airlines and Tourism and El Al Israel Airlines to be allowed to merge.
The decision was made on two grounds. The first is that a merger would rule out any possibility of El Al competing in flights to Eilat, and would consolidate the duopoly of Israir and Arkia on that route. The second is that the proposal raises fears of diminished competition on international flights, because of the complete dependence of the Israeli airlines, particularly Arkia, on the overseas aviation security services provided exclusively by El Al.
El Al stated in response, “El Al sees this as a mistaken decision that first and foremost preserves Arkia’s monopoly on the route to Eilat. Arkia operates 70% of the flights on that route. El Al presented to the Antitrust Authority a financial projection that makes clear why this is a loss-making activity for it and why it has no intention of introducing flights to Eilat, regardless of the fate of the merger. Indeed, it chose to abandon that service several years ago. El Al even made a commitment to the Antitrust Authority that after the merger Israir would buy two additional aircraft for use on the service to Eilat, which would increase the frequency of flights and bring down fares, from which the public would benefit.”
Full Content: Haaretz