aa87
Posts: 224
Joined: Tue Jun 07, 2005 11:37 am

Government Dumps El Al For Alitalia

Thu Aug 24, 2006 12:49 pm

This forum has semi-regular debates over El Al's fidelity to Boeing and the US. Since the market purists love debating the realists, thought you'd find this interesting. News item below, Israeli govt just signed preference travel deal with Alitalia b/c it gave them better terms.


Aug. 23, 2006 8:31
Government dumps El Al for Alitalia
By AVI KRAWITZ


The government added to El Al Israel Airline's woes Tuesday, signing an agreement with Alitalia to be the prefered carrier for public servants flying abroad on official business.

Already feeling the effects of stronger competition from foreign airlines this year, El Al bashed the decision, calling the move puzzling in light of recent events in the country.

"Even in these days when the Israeli aviation industry is absorbing so much damage from the war in the North, the government found it appropriate to publish another tender and with it strengthen the foreign airlines," said Haim Romano, El Al chief executive officer. "In the past few weeks our pilots have divided their time between reserve duty and flying passengers to and from Israel, and this is the reward the government presents to them."

Accountant General Yoram Zalika signed an agreement with Alitalia to give government workers discounts on work-related travel, the Finance Ministry said Tuesday, adding that the move was aimed at gaining cheaper fares for government bodies.

"This is part of the government policy, which started with the privatization of El Al, to purchase tickets based on the cheapest price and not on the basis that it was obligated to buy from EL Al as it had been accustomed to doing," a Finance Ministry statement read.

Under the agreement, in addition to discounted rates on tickets the government purchases for its workers from Alitalia, it will also receive free scheduling changes, special rates for overweight luggage and other services.

The ministry added that workers were not obligated to fly Alitalia and were free to find better deals and more convenient scheduling.

Zalika said he hoped the agreement would serve as a catalyst to set up a government agency to deal with travel, which would handle all pricing matters including hotel accommodations.

"Such a process will save the government around NIS 10 million per year, once it is in place," he said.

Meanwhile, as the government said the aim of the agreement is to open its business to competition among foreign airlines operating in Israel, the deal served as an added blow to El Al, which was already feeling the heat from the added competition in the market this year.

In an attempt to adopt a more liberal aviation policy, or "open the skies", and in answer to higher tourist demand, the government allowed foreign carriers to increase their capacities on the Tel Aviv route starting in April this year, putting added pressure on the Israeli carrier and forcing it to issue a profit warning for the rest of the year.

Criticizing the government for harming Israeli aviation in the process, the company last week reported a loss of NIS 15.1m. for the second quarter, citing an "unprecedented 29 percent rise in competition" among its reasons for the poor performance

However it was the patriotic card the company played this time in response to the government move to the green, white and red flag carrier.

"Just last week, Prime Minister Ehud Olmert called El Al the national carrier when we brought in three plane loads of Olim Hadashim [with Nefesh B'nefesh] and now they sign an agreement dafka with the Italian airline," Romano said. "This is very peculiar behavior and I doubt the Italian government would do the same thing to its national carrier."
 
ETStar
Posts: 1850
Joined: Mon Jan 12, 2004 6:25 am

RE: Government Dumps El Al For Alitalia

Fri Aug 25, 2006 11:55 am

Kick in the groin? Prolly. But it is also obvious that the government itself started reeling from whatever El Al was charging it!

Quoting AA87 (Thread starter):
"Just last week, Prime Minister Ehud Olmert called El Al the national carrier when we brought in three plane loads of Olim Hadashim [with Nefesh B'nefesh] and now they sign an agreement dafka with the Italian airline," Romano said. "This is very peculiar behavior and I doubt the Italian government would do the same thing to its national carrier."

El Al definitely has a few cards to lift up. If it ain't this, it's the other. And when it comes to bring in fresh "Israelis" from all over the world, doesn't El Al get compensated by the government? That's gotta be a business unit on its own.
 
CXA330300
Posts: 1304
Joined: Wed May 26, 2004 5:51 am

RE: Government Dumps El Al For Alitalia

Fri Aug 25, 2006 12:12 pm

Perhaps El Al wouldn't be so worried about profit if they didn't bow down to the Hasidim and operated on Shabbat.
Home airport now: JFK
 
nateDAL
Posts: 404
Joined: Thu Jan 05, 2006 11:38 am

RE: Government Dumps El Al For Alitalia

Fri Aug 25, 2006 12:14 pm

If I were an Israeli taxpayer, I would be upset if the government signed a preferred travel agreement with anyone other than the lowest bidder.

Sounds like a good deal.
Set Love Free
 
atnight
Posts: 537
Joined: Sat Dec 03, 2005 8:06 am

RE: Government Dumps El Al For Alitalia

Fri Aug 25, 2006 12:20 pm

This is a real surprise! Why would Alitalia be the one chosen? It doesn't seem too logical, as Alitalia isn't exactly the best option in the market nowdays anyways... If they needed an European carrier, the logical ones would be LH or AF/KL as they seems better fitted and more reliable than Alitalia.... Perhaps the only benefit of Ailitalia is that they are closer, with HUBs in Rome and Milan..... but still, and odd decision if you ask me.... anyone has more details about it?
On the other side of the story, it sorta makes me laugh about one thing... the italians (romans) are again starting to conquer the jews (israel)... (hope no one takes offence, it's a silly thought)....
B707 B727 B733/5/7/8/9 B742/4 B752/3 B763/4 B772 A310 A318/319/320 A332 A343 MD80 DC9/10 CRJ200 ERJ145 ERJ-170 Be1900 Da
 
ltbewr
Posts: 12917
Joined: Thu Jan 29, 2004 1:24 pm

RE: Government Dumps El Al For Alitalia

Fri Aug 25, 2006 12:23 pm

Yes, ElAl was government owned until recent years, but those days are long gone. Yet, they are going to encourage government employees to travel on Alitalia, an airline that gets substantual subsidies from it's home country of Italy. Perhaps ElAl has determined that they can sell their seats for more money to the general public rather than at a government mandated discount rate. Even here in the USA we mandate government employees to take USA based airlines whenever possible although at times of certain crises, they have advised them to use non-USA based airlines for safety/security reasons.
 
ETStar
Posts: 1850
Joined: Mon Jan 12, 2004 6:25 am

RE: Government Dumps El Al For Alitalia

Fri Aug 25, 2006 12:26 pm

Quoting CXA330300 (Reply 2):
Perhaps El Al wouldn't be so worried about profit if they didn't bow down to the Hasidim and operated on Shabbat.

Doesn't it go with the belief and religion that comes with the territory? If it ain't the government it would be the radical and extremists that would have a say about it. Maybe once it is privatised, things may change...

Quoting Atnight (Reply 4):


This is a real surprise! Why would Alitalia be the one chosen? It doesn't seem too logical, as Alitalia isn't exactly the best option in the market nowdays anyways... If they needed an European carrier, the logical ones would be LH or AF/KL as they seems better fitted and more reliable than Alitalia.... Perhaps the only benefit of Ailitalia is that they are closer, with HUBs in Rome and Milan..... but still, and odd decision if you ask me.... anyone has more details about it?

It all comes down to the $$ I guess.

Quoting Atnight (Reply 4):

On the other side of the story, it sorta makes me laugh about one thing... the italians (romans) are again starting to conquer the jews (israel)... (hope no one takes offence, it's a silly thought)....

Watch out for another card to be raised  Wink
 
PanHAM
Posts: 9288
Joined: Fri May 06, 2005 6:44 pm

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 2:56 am

I guess Altialia made an offer they could not refuse.  Cool
Was Erlauben Erdogan!!!
 
ImperialEagle
Posts: 2296
Joined: Sat Jan 14, 2006 10:53 am

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 3:19 am

Quoting Atnight (Reply 4):
the italians (romans) are again starting to conquer the jews (israel)... (hope no one takes offence, it's a silly thought)....

In the last hundred years of so--at least,---- the Italians have proven themselves supporters of the Jewish people---especially their OWN Jewish population. In spite of the Facist era during WWII and its close ties to the Nazis, the Italians (via an "underground movement") proved fierce protectors of its Jews. So it doesn't surprise me the Israeli government is comfortable working with them.
AND AZ can use the business---good for them!

Quoting ETStar (Reply 6):
once it is privatised, things may change...

Competition is a good thing!

Back in the day, the only way to get to TLV in luxury was on TW. Great inflight service!
This was no secret.
EL AL fought back with equipment standards. The non-stop Britannias were a good example---trimming a good bit of time off of the east-bound service, before the pure-jets came on line.

Hopefully, one day EL AL will---on its own----elevate itself to the status of a "world class" carrier at long last.
Of course, it will have to overcome the ages old "poison" of anti-semitism to be allowed into many areas of the world.
Good Luck!
"If everything seems under control, you're just not going fast enough!"
 
airbazar
Posts: 7901
Joined: Wed Sep 10, 2003 11:12 pm

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 3:22 am

Quoting NateDAL (Reply 3):
If I were an Israeli taxpayer, I would be upset if the government signed a preferred travel agreement with anyone other than the lowest bidder.

But you are an Israeli tax payer  Smile How many million per year do we give them these days? i lost count.
However, every tax payer ot any country should be happy that their government uses their hard earned tax money in the most efficient and economic way.
 
YULWinterSkies
Posts: 1266
Joined: Thu Jun 09, 2005 11:42 pm

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 3:45 am

Quoting Airbazar (Reply 9):
However, every tax payer ot any country should be happy that their government uses their hard earned tax money in the most efficient and economic way.

Yes, but shouldn't they also be happy that their government does its best to support the national economy, and not foreign countries' economies instead?
For a country as proud as Israel looks (from outside), I'm honestly very surprised of such a move...

But perhaps it's just a warning to LY to be reasonable when it comes to pricing!
When I doubt... go running!
 
CXA330300
Posts: 1304
Joined: Wed May 26, 2004 5:51 am

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 3:54 am

Israel might be proud, but there's plenty of infighting to keep one both annoyed and entertained.

Quoting ETStar (Reply 6):
Doesn't it go with the belief and religion that comes with the territory? If it ain't the government it would be the radical and extremists that would have a say about it. Maybe once it is privatised, things may change...

Many of LY's customers would prefer to fly on Saturday as the dotties and extremists don't fly then. LY could make a lot of money. I try very hard to fly on Shabbat when I go to Israel, as it is both cheaper and more pleasant.

Quoting Airbazar (Reply 9):
How many million per year do we give them these days?

$3 billion, give or take.
Home airport now: JFK
 
Trvlr
Posts: 4251
Joined: Thu Feb 17, 2000 9:58 am

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 4:03 am

Alitalia is often the cheapest carrier to Israel, at least from the United States.

A good decision by the Israeli gov't and for the Israeli people.

Aaron G.
 
cedarjet
Posts: 8202
Joined: Mon May 24, 1999 1:12 am

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 4:11 am

I think it's wrong. I would normally agree with...

Quoting NateDAL (Reply 3):
If I were an Israeli taxpayer, I would be upset if the government signed a preferred travel agreement with anyone other than the lowest bidder. Sounds like a good deal.

...but El Al are not a normal airline. I'm sure AZ's costs are lower than LY cos Alitalia only have to do special security on flights to Tel Aviv and maybe the USA, even though every AZ flight (ie Milan to London, Toronto, Joburg et al) may carry Israelis or people who O&D'd in Israeli. El Al need "El Al style" security at every port. Plus, as has been pointed out, as a Jewish airline, El Al can only fly six days a week.

If it was a level playing field and Israel was a normal country, then lowest bidder gets the gig - no problem. But the playing field is against El Al, and Israel's national airline is especially important, because it's virtually the only way to travel there. There's the Allenby Bridge but Israel is not an easy place to drive to. El Al is a lifeline for the country. Btw what is wrong with Israel's government lately?

Quoting Airbazar (Reply 9):
How many million per year do we give them these days?

I thought it was $6 billion, give or take?
fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
 
Ken777
Posts: 9374
Joined: Thu Mar 11, 2004 5:39 am

RE: Government Dumps El Al For Alitalia

Sat Aug 26, 2006 4:32 am

Quoting AA87 (Thread starter):
The ministry added that workers were not obligated to fly Alitalia and were free to find better deals and more convenient scheduling.

This will probably be a very good "out" for those that want to keep flying El Al. I would guess that a lot of government employees will use this out because of their desire to support the airline.

It's unfortunate, but the government picked a very bad time to make this switch.

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