The Israeli government approved a plan today (Sunday) to participate in partially paying for cancelled flights to the United States and Canada, with the hope of increasing the number of companies and flights to and from the country and increase economic activity between the regions.
The government approved the proposal by the Transportation and Finance Ministers, in cooperation with the Economic Committee Chair, to have the state participate in compensating passengers in case of flight cancellations to the USA and Canada.
According to the government, the proposal, part of the Aviation Encouragement Law during wartime, aims to expand flight options to North America, increase competition, and contribute to lowering ticket prices. Participation is only for airlines that add at least 2 weekly flights to these destinations.
According to the government decision, the state will cover 50% of compensation payments that airlines are required to pay passengers in case of flight cancellation due to operational issues.
The decision, led by Ministers Regev and Smotrich, aims to:
- Expand flight options to North America and strengthen economic ties with the USA and Canada
- Increase competition by encouraging additional airlines to operate direct wide-body flights
- Reduce ticket prices, which dramatically increased following the war and reduced activity
The government allocated 15 million shekels to assist companies meeting the specified conditions.
The government explained the rationale of this subsidy as follows:
Due to the "Swords of Iron" war, passenger traffic to and from Israel significantly decreased, especially on routes to North America. Most foreign airlines stopped their operations, with El Al being the only carrier continuing to fly to these destinations, but with limited capacity that doesn't meet demand. This situation led to steep price increases, causing many passengers to avoid international travel.
In the past year, international passenger traffic to and from Israel dropped significantly. From four airlines operating around 240 weekly flights to various North American destinations, only El Al remains, and flight volume between Israel and the USA decreased by 40%.
Airlines eligible for assistance must operate regular and direct flights between Israel and the USA/Canada using wide-body aircraft. To qualify, they must increase their activity to these destinations by at least two weekly flights per destination, compared to the last quarter of 2024.
The assistance limitations are designed to ensure support is directed towards actual increased activity, not existing flights, thus encouraging more airlines to enter the market and provide attractive long-haul solutions to North America.
The Transportation Ministry noted that approximately 78% of foreign investments in Israel come from North American destinations, making support for these routes crucial for returning to routine, continuing economic growth, reducing flight prices, and increasing supply.
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