The mayor of Eilat, Meir Yitzchak Halevi, has asked the state’s top antitrust official, Or Schwartz, to step in and prevent a proposed merger of El Al and Israir airlines. The merger, Halevi said, will harm tourism in Eilat and tourism in Israel in general.
Last May, El Al’s low-cost subsidiary SunDor signed a memorandum of understanding with Israir to merge operations. El Al offered to buy Israir from current owners IDB group for $25 million, in a bid to strengthen its offerings in the wake of the many new low-cost carriers that are now flying to Eilat — and the even greater competition expected when the new Ilan Ramon International Airport north of Eilat opens next year.
In return, IDB group will receive a 25-percent stake in the new company besides the $24 million in cash. The deal does not include Israir planes themselves, which the company will try to lease out; failing that, El Al has agreed to buy Israir’s fleet for $70 million.
In his letter to Schwartz, Halevi said that the deal would be bad for Eilat tourism. “We are very concerned over the rumors that El Al claims that its Tel Aviv-Eilat route is not profitable,” the letter said. “The immediate results of a monopoly on this route will be higher prices and less convenient schedules, which will harm the tourist industry and the livelihoods of many Eilat residents,” Halevi said, asking that the Antitrust Authority act to prevent the establishment of a monopoly.