Israeli Airlines Seek Government Assistance to Navigate Aviation Industry Crisis

Israir CEO Uri Sirkis revealed that Israeli airlines are seeking urgent short-term cash flow assistance from the Ministry of Finance, as well as long-term priority support from the State of Israel. This plea comes as the country's aviation industry faces significant challenges, with a sharp decline in passenger numbers and financial strain.

As of the end of October, 1,174,470 passengers passed through Israeli airports, marking a stark contrast to the same period the previous year when 1,992,920 passengers traveled. The decline can be attributed to various factors, including the lingering effects of the global pandemic and the impact of the "Tibi Law" or the Aviation Services Law.

The immediate issue at hand, which the airlines are looking to address through short-term assistance, is the compensation and rebooking obligations imposed on carriers by the "Tibi Law." This law stipulates that passengers must be compensated up to NIS 3,200, depending on the flight distance, if their flights are canceled. However, airlines are exempt from compensating passengers in cases of "special circumstances beyond the control of the airline." Nevertheless, they are still obligated to compensate passengers who voluntarily cancel their flights.

Beyond the month of October, the outlook remains challenging for Israeli airlines. They can no longer rely on Israeli travelers returning from abroad to boost their operations. As a result, they have reached out to the Ministry of Finance and financial institutions to secure short-term assistance.

In addition to their discussions with the Ministry of Finance, representatives of Israeli airlines and the cargo company CAL met with Minister of Transportation Miri Regev, the Director General of the Ministry of Transportation Moshe Ben Zakan, and other government officials to request aid to cover employee wages. Minister Regev emphasized the importance of preserving an active aircraft fleet to avoid the difficulties of training new employees.

The proposed model from the Ministry of Transportation involves a combination of state funding, employer contributions, and employee support to ensure that airline workers receive their wages. The Ministry is also supportive of facilitating financial compensation to customers to assist the citizens of Israel during this challenging period.

As part of the process, airlines will be required to submit detailed financial reports documenting the extent of the financial challenges they are facing. These reports will form the basis for working meetings with the Ministry of Finance to determine the most effective solutions for addressing the crisis in the Israeli aviation industry.