ISRAEL: An Introduction to Transportation: Aviation
Aviation – Israel (for Chambers)
Eyal Doron & Hugh Kowarsky, S. Horowitz & Co.
Israel’s unique geopolitical situation makes air transportation a vital factor in maintaining its connections with the rest of the world and thus it is also a very attractive hub for air transport back and forth between West and East. Often referred to as the 'start-up nation,' Israel is also a world leader in the areas of unmanned aircraft, drones and mini-satellites as well as in airport and aviation security solutions. These elements create distinct opportunities in Israel for airlines, investors and other international players in the aviation and aerospace industries.
Recent Major Changes in Israel’s Air Transportation Sector following Geo-political Changes
During recent years, the Israeli aviation sector has undergone major changes in the wake of positive geo-political developments, the effect of which has not yet been fully felt due to the negative impact of COVID-19.
The first major change was the liberalisation of Israel’s policy on bilateral and multilateral air services agreements and the resulting signature of the EU–Israel Open Skies Agreement in 2012. This change in policy has resulted in a significant increase in the operations of foreign airlines (including low-cost airlines) and the frequency of flights to and from Israel, as well as a decrease in air fares. Therefore, international passenger traffic passing through Israel’s main international airport, Ben Gurion Airport (BGA), increased by more than 90 per cent between 2012 (12.4 million) and 2019 (24.036 million). This number was expected to grow further during 2020, taking into account also the opening in January 2019 of a second international airport – Ramon (ETM) (located in the south of the country). However, in practice, because of the COVID-19 pandemic, international passenger traffic through BGA decreased significantly (by 84 per cent from 2019 to 2020), leading to a continuing crisis in the Israeli aviation sector. In view of this crisis, Israel's national airline El Al Airlines was forced to slim down following a government bailout and recently entered a non-binding memorandum of understanding to buy local rival Arkia. Under the proposed deal, Arkia would become a fully-owned subsidiary of El Al, which would leave only one domestic competitor (Israir). This presents potential opportunities for new players to enter the Israeli aviation market.
Another major change occurred in March 2018, when Saudi Arabia, which does not have formal diplomatic relations with Israel, opened its airspace to commercial flights to and from Israel for the first time with the inauguration of an Air India route between New Delhi and Tel Aviv. This dramatically shortened flight times for foreign airlines connecting Israel and the east.
In August 2020, following the signature of the Abraham Accords establishing diplomatic relations between Israel, the United Arab Emirates and Bahrain, and of Israel’s normalisation agreement with Morocco, new bilateral aviation agreements were signed between Israel and each of these countries. Under these agreements, there are now direct flights between Israel and these countries and will be for the foreseeable future. In December 2020, as a result of the normalization that the Abraham Accords introduced, Saudi Arabia gave official approval for Israeli airlines to fly over the country’s airspace, thus enabling Israeli airlines to offer direct flights to the UAE.
Following these changes, Philippine Airlines plans to launch direct flights (crossing the Saudi airspace) between Manila and Tel Aviv as of April 2022. These will be the first direct flights between the Philippines and Israel and will reduce flight duration substantially.
Israel’s Aviation Regulatory Regime and Legal Framework
The Israeli Ministry of Transportation (MOT) has primary responsibility for regulation of the aviation sector in Israel. In 2005, the MOT established Israel’s Civil Aviation Authority (CAAI) to regulate and supervise all aviation-related matters, including the issue of aviation licences and permits. The body responsible for airports in Israel is the Israel Airports Authority. The Aviation Security Operation Centre (ASOC) in the Security Department of the MOT oversees aviation security. Aviation security is a priority in Israel in the light of constant terrorist threats. Operating permits will not be granted unless ASOC has received and approved written confirmation of compliance with ASOC’s security requirements from the relevant foreign airports and airlines. In view of Israel’s special geopolitical situation, notification of all overflights must be submitted to (and require approval by) ASOC in advance. A condition for such approval is compliance with the high-risk security requirements set out in MOT’s Security Directive and applicable to flights landing in Israel.
International Carriage: Israel is party to several international aviation-related conventions governing the liability of air carriers in international carriage, including the Warsaw Convention 1929, the Guadalajara Convention 1961 and the Montreal Convention 1999, as well as their respective protocols. These conventions have been given effect in Israeli domestic law by the Air Transport Law 1980 (ATL). Section 3B of the ATL provides that where both the Montreal Convention and another of the conventions adopted by the ATL apply, the Montreal Convention will govern. Section 10 of the ATL provides that the liability for damage, including liability for the death of a passenger, of a carrier under the ATL (i.e., the liability of a carrier under a convention made applicable in Israel by the ATL), substitutes the liability of the carrier under any other Israeli law. The Israeli Supreme Court has implemented this rule (‘the exclusivity of grounds of action rule’ or ‘the pre-emption of claims rule’), holding that where a claim is governed by the ATL, a passenger will not be able to rely on other provisions of domestic law. Israel is also party to the Chicago Convention on International Civil Aviation 1944, adopted into domestic law by the Air Navigation Law 2011 (ANL), and to the Tokyo Convention 1944 on offences and certain other acts committed onboard aircraft given domestic effect by the Air Navigation Regulations (Offences and Jurisdiction) 1971. Israel, however, is not a party to the Cape Town Convention 2001 and the related Aircraft Protocol. A government decision dated 15.6.2006 approved the accession of Israel to the Cape Town Convention, and authorized the Minister of Foreign Affairs to implement the decision, although in practice this has not been done.
Civil aviation operations: Civil aviation operations (including the operation of helicopters and gliders) are governed by the ANL and the regulations enacted thereunder. The ANL regulates the identification and registration of aircraft, licensing and training of personnel, airworthiness of aircraft, general operating and flight rules, commercial air services and air navigation services.
Licensing: The Licensing of Aviation Services Law 1963 (LASL) and the ANL regulate the licensing of aviation-related activities. An Israeli individual or entity may operate aircraft for commercial purposes, subject to obtaining a commercial operating licence (COL) from the MOT and an air operator certificate (AOC) from the CAAI. Foreign individuals and entities are not eligible for an Israeli COL or AOC (foreign airlines obtain seasonal landing permits subject to meeting the requirements set by the CAAI and ASOC’s security requirements). To obtain a COL, the applicant operator must submit evidence of its financial resources, details of its operations, crew qualifications and experience, and consumer-related details. The MOT has the power to grant, suspend and cancel the COL and determine its period of validity. The issue of an AOC is conditional on possession of a COL and subject to proof that the applicant possesses adequate aircraft and facilities for the operations in question.
Passenger Rights: Passenger rights are regulated pursuant to the ATL by the Montreal Convention (or other applicable convention) and the ASL. The Aviation Services Law (Compensation and Assistance for Flight Cancellation or Change of Conditions) 2012 (ASL), a pro-consumer act of legislation establishing passenger rights, similar to those under Regulation (EC) No. 261/2004, to compensation and other benefits in the case of flight delays or cancellations and denial of boarding (as a result of overbooking, etc.). Passengers’ rights relating to the purchase and cancellation of flight tickets are regulated by the Israeli Consumer Protection Law 1981 (CPL), which, in certain circumstances, including in the case of transactions made remotely (by telephone, email, etc.) and, subject to certain conditions, entitles consumers to cancel transactions without cause and to reimbursement of the price paid, minus a small cancellation fee.
Safety: Israel complies with the accepted international standards in the field of safety. The Israeli safety regulations are based on the Chicago Convention, the safety rules of the International Civil Aviation Organization (ICAO) and the US Federal Aviation Regulations. Israel is a participating state in the European SAFA program. In 2016, Israel entered into a collaboration agreement with Eurocontrol, the European Organization for the Safety of Air Navigation, which engages in airspace planning and air traffic management. The collaboration agreement provides Israel with access to aviation services, including air navigation services and control, in a way that increases its ability to prevent flight delays and manage air traffic more efficiently and safely.
Competition: Supervision of competition in Israel, including in the aviation sector, is carried out by the Israeli Competition Authority in accordance with Israel’s Economic Competition Law 1988 (ECL). The ECL deals with restrictive arrangements, mergers and acquisitions of companies and monopolies. Entering into a restrictive arrangement is prohibited unless the arrangement is expressly permitted by or pursuant to the ECL, by the Competition Tribunal established under the ECL or exempted by the Commissioner of the Competition Authority.
Drones: Israeli aviation regulations enacted in the 1970s and the early 1980s currently constitute the regulatory framework for the operation of drones (unmanned aerial vehicles) weighing over 300 grams and not meant for recreational use. Due to the increasing use of drones for various purposes over recent years, and the realization that drones pose a threat to air safety, the CAAI has circulated draft regulations governing the public use of drones (weighing between 250 grams to 25 kilograms). Having regard to the simplicity of the US Federal Aviation Administration Regulations dealing with this topic and the experience gained from their implementation since their introduction in 2016, the draft regulations prepared by the CAAI rely on the US model. The proposed regulations will deal with the essential aspects of drone operation, such as requirements relating to the drone operator (principally, minimum age and the need for a licence), requirements regarding drone software and hardware and strict rules regarding the operation of drones in public places (including a ban on operation without direct eye contact, in proximity to an airport or within residential neighbourhoods). The draft regulations have been published for review, and hearings of objections raised against the draft were held during April-May 2019. The draft regulations were approved recently by the Israeli Air Force and currently await final confirmation by the Ministry of Justice for continuation of the process.