Communication from the Commission - Developing a common aviation area with Israel
Date: 2007-11-09
Institutions: European Commission
Subjects: Israel, air space, air transport, cooperation policy, transport policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 9.11.2007 
COM(2007) 691 final 

COMMUNICATION FROM THE COMMISSION 

Developing a Common Aviation Area with Israel 

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1. 

INTRODUCTION  

In its Communication “Developing the agenda for the Community’s external aviation 
policy”1,  the  Commission  highlighted  the  importance  of  creating  a  Common 
Aviation Area with its Eastern and Southern Neighbours. The final objective should 
be to bring together the EU and its partners along its southern and eastern borders, 
with the aim to share the same rules in relation to market operations. The Council of 
the European Union on 27 June 2005 supported this objective in its “Conclusions on 
developing  the  agenda  for  the  Community’s  external  aviation  policy”  in  which  it 
welcomed  the  progress  in  developing  a  wider  Common  Aviation  Area  by  2010 
incorporating EU neighbouring countries. 

The  improvement  of  EU  aviation  relations  with  other  neighbours  with  the  final 
objective  to  create  a  Common  Aviation  Area  is  an  important  step  for  the  further 
development  in  economic  terms  of  the  European  aviation  industry.  Destinations  in 
neighbouring  countries  of  the  EU  represent  19%  of  the  international  traffic  beyond 
the EU, slightly less important than traffic to the markets in North America. The EU 
has already integrated the aviation markets of Switzerland, Norway and Iceland, and 
in June 2006 the Community and its Member States signed the European Common 
Aviation Agreement (ECAA) with the Western Balkans, followed by the signature of 
the first Euro-Mediterranean Aviation Agreement with Morocco in December 2006. 

Israel  is  a  key  partner  for  the  EU  in  the  Middle-East  and  in  the  context  of  the 
European Neighbourhood Policy. EU relations with Israel are governed by the Euro-
Mediterranean Partnership established through the EU-Israel Association Agreement 
and  the  regional  dimension  of  the  Barcelona  Process.  The  Association  Agreement 
highlights  the  objective  to  strengthen  cooperation  in  the  field  of  transport 
(Article 53),  provides  for  regulatory  cooperation  between  the  parties,  especially  in 
the areas of aviation safety and security, and encourages technological and research 
cooperation in the transport sector including aviation.  

Furthermore,  in  December  2004  both  sides  endorsed  a  joint  EU-Israel  ENP  Action 
Plan to support Israel’s objective to further integrate into the European economic and 
social  structures.  The  Action  Plan  entered  into  force  on  April  2005.  The  concrete 
priorities outlined in the Action Plan are an increased cooperation in the field of civil 
aviation, including air traffic management (involvement in the Single European Sky), 
safety  and  security  issues,  a  mutual  recognition  agreement  on  airworthiness  and 
exploring the possibilities for a comprehensive aviation agreement. 

Israel, in its drive towards closer cooperation with the EU, has shown interest in the 
opening  of negotiations on a comprehensive aviation agreement,  and has shown  its 
determination to reform the framework for international air transport jointly with the 
EU.  An  Israeli  inter-ministerial  committee  was  established  to  study  the  issue  of 
deepening  aviation  relations  with 
in  April  2007  adopted  a 
to  open  without  delay  comprehensive  aviation 
recommendation  for  Israel 
negotiations with the EU. 

the  EU,  and 

1 

COM(2005) 79 final, dated 11.3.2005 

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Regarding  the  legal  framework,  and  as  a  consequence  of  the  “Open  Skies” 
judgements  of  the  European  Court  of  Justice  on  5  November  2002,  the  bilateral 
agreements  between  Member  States  and  Israel  have  to  be  amended  since  some  of 
their  provisions,  in  particular  the  provisions  that  do  not  authorise  Community  air 
carriers to fly to Israel unless they leave from their countries of origin, are not in line 
with  Community  law.  The  Commission  has  been  given  a  “horizontal”  mandate  to 
negotiate with third countries such necessary corrections to bilateral agreements. The 
Commission’s  use  of  the  horizontal  mandate  since  2005  has  proven  efficient  in 
rendering  a  very  significant  number  of  bilateral  agreements  compatible  with 
Community law.  

The European Commission has invited Israel to open horizontal negotiations with a 
view  to  resolving  the  legal  issues  raised  by  the  European  Court  of  Justice  in  the 
"Open  Skies"  cases  and  creating  a  solid  basis  for  the  further  development  of  EU-
Israel  aviation  relations.  The  Israeli  side  has  indicated  its  preference  to  conduct 
horizontal  negotiations  in  parallel  with  negotiations  on  a  comprehensive  aviation 
agreement. It is to be noted that a similar approach has been successfully followed in 
the course of the aviation negotiations with Morocco, where a horizontal agreement 
was  initialled  by  the  parties  soon  after  the  opening  of  comprehensive  aviation 
negotiations.  

With  this  Communication  the  Commission  therefore  recommends  that  the  Council 
authorises  the  Commission  to  negotiate  a  comprehensive  agreement  on  a  Common 
Aviation  Area  with  Israel  combining  market  opening  with  a  parallel  process  of 
regulatory co-operation and/or convergence notably in priority areas such as aviation 
safety,  security,  environmental  protection  and  the  application  of  state  aid  and 
competition  rules  aiming  at  ensuring  a  level  playing  field  and  fair  and  equal 
conditions for competition.  

2. 

THE EXISTING FRAMEWORK  

The EU is the largest trading partner of Israel, who is in turn one of the EU’s biggest 
trading  partners  in  the  Euromed  area,  with  total  trade  amounting  to  almost  €  23 
billion  in  2005.  The  EU  is  the  leading  source  of  imports  for  Israel,  and  its  second 
most important destination for exports. Excluding diamonds, total trade with the EU 
represented  35%  of  Israel’s  total  trade.  Under  the  Euro-Mediterranean  Association 
Agreement,  the  EU  and  Israel  have  agreed  to  liberalize  the  trade  in  industrial 
products. 

Israel  was  the  first  non-European  country  to  be  associated  to  the  European 
Community’s  Framework  Programme  for  Research  and  Technical  Development. 
Israel's special status is the result of its high level of scientific and research capability 
and  the  dense  network  of  longstanding  relations  in  scientific  and  technical  co-
operation between Israel and the EU. 

The  EU  and  Israel  have  also  initialled  an  agreement  on  Israel’s  participation  in 
Galileo,  Europe’s  satellite  radio-navigation  programme.  This  clearly  demonstrates 
the commitment of Israel towards a stronger integration in the EU programmes and 
activities.  

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As regards cooperation in the transport sector, successful discussions with the EU for 
a Joint Israel-Palestinian Transport Office to assist practical aspects of joint transport 
sector planning have taken place. 

As far as aviation is concerned, the EU and the Israeli markets are closely connected. 
Israel  has  bilateral  air  services  agreements  with  most  Member  States  which 
highlights the importance of aviation relations to this key neighbour of the European 
Union. The EU market is the most important one, accounting for 4.54 million of the 
total  8.59  million  (or  54%)  of  international  air  passenger  movements  to  and  from 
Israel.  Similarly,  for  the  EU  Israel  is  the  most  important  aviation  market  in  the 
Middle-East  with a strong growth potential. Passenger movements  between the EU 
and Israel, despite security concerns, grew at an average rate of 2.7% between 1995 
and  2005.  This  figure  is  expected  to  further  increase,  in  accordance  to  the  average 
growth  of  6.6%  of  the  number  of  passengers  travelling  between  Europe  and  the 
Middle  East  in  the  2005-2009  period  forecasted  by  IATA.  The  largest  individual 
two-way  markets  are  currently  France  (661,000  passengers),  the  UK  (651,000), 
Germany (626,000), Italy (579,000), Spain (364,000) and the Netherlands (266,000).  

The  capacity  provided  in  the  total  EU-Israel  market  is  quite  evenly  split  between 
Community and Israeli air carriers. This is presumably due in part to the provisions 
of  the  bilateral  air  services  agreements  between  Member  States  and  Israel,  which 
generally  restrict  designation  to  one  air  carrier  on  each  side,  and  difer  capacity 
arrangements to the requirements of both air carriers. It seems that a significant part 
of the carriage of Israeli passengers via EU markets is 6th freedom traffic en route to 
the US.  

Israel  is  also  a  growing  tourism  market  for  Europe.  In  2004,  1.5  million  tourists 
visited Israel, 89% of which (1.34 million) arrived by air. This represents an increase 
of  42%  over  2003,  but  still  only  56%  of  2000  levels.  Even  this  modest  recovery 
would  suggest  a  significant  potential  of  rapid  growth  depending  on  the  political 
situation.  As  most  tourists  arrive  by  air,  growth  in  tourism  will  result  in  enhanced 
demand  for  air  services.  As  regards  outbound  air  traffic,  the  number  of  Israeli 
passengers  travelling  to  other  countries  has  exceeded  substantially  the  number  of 
foreign visitors to Israel since 2000. 

The Israeli aviation sector  

The  airline  market  in  Israel  is  characterised  by  the  dominance  of  El  Al  Israeli 
Airlines. El Al is the only Israeli carrier operating scheduled services to/from Israel, 
though  charter  airlines  Arkia,  Israair  and  Sun  d’Or  operate  services  to  short  and 
medium-haul  destinations.  Sun  d’Or  is  a  wholly-owned  subsidiary  of  El  Al.  For 
Israeli airlines, point-to-point service profiles have dominated. 

For Community carriers who are global operators and can distribute traffic to a range 
of intercontinental destinations, Israel is an interesting 6th freedom market, as well as 
a  meaningful  origin  and  destination  market.  For  smaller  and/or  newer  carriers, 
notably  the  new  class  of  low  cost  carriers,  Israel  offers  selective  point-to-point 
service opportunities.  

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Israel has bilateral air services agreements with 21 Member States as well as with a 
significant number of other international partners. Israel is a long-standing member 
of the International Organisation of Civil Aviation (ICAO) and is a signatory to other 
important multilateral aviation agreements. However, the Israeli aviation policy has 
remained  careful  and  conservative,  and  so  far  Israel  has  been  reluctant  in  the  air 
transport  field  to  liberalise  historic  agreements  with  Member  States.  The  invitation 
by  the  Israeli  Government  to  open  Community  level  aviation  negotiations  shows  a 
clear move towards exploring to opening up of air transport markets with the EU. 

As  regards  regional  integration  of  air  transport  markets,  Israel  has  so  far  tried 
through  bilateral  efforts  to  selectively  widen  and  intensify  its  relationship  with 
neighbouring and regional states. Such efforts have been severely constrained by the 
difficult  political  issues  of  the  region.  The  EU  approach  towards  establishing  a 
Common  Aviation  Area  would  provide  Israel  with  new  opportunities  for  regional 
cooperation,  including  regulatory  harmonisation  through  achieving  high  Euro-
Mediterranean common standards. 

In  the  regulatory  field,  Israel  takes  its  ICAO  obligations  very  seriously  and  pro-
actively supports consistency and quality in international aviation regulation. Israeli 
air  transport  has  a  solid  safety  performance  record  and  its  aviation  security  is 
probably the most stringent in the world. Its interest and performance in the area of 
environmental protection is a very positive example. Israel’s airline employees enjoy 
good  social  protections  and  exhibit  a  high  level  of  professionalism.  Licensing  of 
airlines is carried out in a stringent manner. The subject of continuing the exemption 
of air transport under the competition rules is now under active debate. 

Israel applies high standards in the operation and regulation of its air transport, which 
provides  a  solid  basis  for  regulatory  convergence  with  the  EU  acquis  on  aviation 
through  mutual  recognition.  EASA  and  Israel  have  already  signed  a  working 
arrangement covering airworthiness certifications. 

3. 

FURTHER STRENGTHENING THE RELATIONS WITH A KEY NEIGHBOUR 

In  May  2007,  following  the  recommendations  of  the  Israeli  inter-ministerial 
committee,  the  Israeli  Government  formally  proposed  to  the  Commission  to  open 
comprehensive aviation negotiations.  

Israel  is  indeed  adopting  a  more  liberal  approach  towards  air  services  between 
Member States and Israel, and is granting better access to the Israeli market. Besides 
increased  weekly  frequencies,  Israel  also  agreed  in  some  cases  to  reciprocally 
increase the number of Community air carriers that are authorised to operate between 
the  respective  Member  States  and  Israel.  This  shows  Israel's  strong  commitment  to 
engage  in  aviation  negotiations  with  the  Community  that  may  result  in  the  further 
integration of the markets. 

4. 

BENEFITS AND ADDED VALUE OF A COMMUNITY APPROACH 

The  civil  aviation  sector  (including  infrastructure,  operators  and  other  industrial 
actors) is a significant component of the European economy. Air transport operators 

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alone  account  for  about  0.6%  of  the  EU’s  value-added  and  employ  more  than 
400.000  people  (0.4  %  of  the  total  number  employed  in  the  non-financial  business 
economy)2,  while  the  whole  sector  employs  about  3  million  people  throughout  the 
EU.  The  creation  of  a  single  aviation  market  since  the  early  90s  has  significantly 
contributed  to  make  the  sector  more  dynamic  and  efficient  and  has  created  large 
economic  and  social  benefits.  Between  1992  and  2003,  the  number  of  intra-
Community  routes  increased  by  more  than  40%.  The  main  Community  carriers 
experienced  a  productivity  rise  of  87%  between  1990  and  2002.3  Nevertheless,  the 
full potential of the internal market is unlikely to be achieved until the Community 
acts  as  a  single  coordinated  entity  in  its  aviation  relations  with  third  countries 
wherever  such  co-ordinated  efforts  can  create  added  value  in  the  interest  of  the 
European aviation industry and users. Moreover, the experiences which the EU has 
gained in this respect are considered highly valuable by third countries. This is even 
more  valid  for  Israel  with  which  the  EU  would  like  to  establish  a  privileged 
relationship. 

The  Member  States  and  Israel  have  traditionally  negotiated  restrictive  bilateral  air 
services  agreements  with  a  reduced  level  of  market  opening  and  strict  market 
conditions for operators. Most agreements still allow for single designation of an air 
carrier  by  each  side  which  practically  restricts  market  access  to  two  carriers. 
Moreover,  in  many  cases  designation  and  frequencies  are  negotiated  on  a  city-pair 
basis  which  further  restricts  market  access.  The  current  system  of  bilateral  air 
services agreements between the Member States and Israel therefore distorts patterns 
of traffic and may disadvantage several Community air carriers as well as consumers 
in some Member States. A Community level aviation agreement would establish – at 
the highest possible level – a level playing field for all Community air carriers and 
allow  passengers  in  all  Member  States  to  benefit  from  similar  conditions  and 
increased traffic between the EU and Israel. 

There would be significant economic benefits from an EU-Israel Common Aviation 
Area. Market opening and the mutual recognition of aviation standards would benefit 
aviation  markets  thanks  to  their  geographical  position  and  the  traditional  close 
economic and trade links between the EU and Israel.  

As  a  consequence  of  market  opening,  travel  opportunities  for  EU  and  Israeli 
passengers would significantly improve. The number of direct connections between 
EU  and  Israel  as  well  as  the  overall  number  of  flights  is  expected  to  significantly 
increase trade and tourism flows between EU and Israel. An important share of the 
economic benefits is expected to be reaped by the European airline industry and the 
wider  European  economy.  A  Common  Aviation Area would create substantial  new 
market opportunities for air carriers in the EU that would like to start operations to 
Israel but do currently not have the necessary traffic rights. It could also facilitate the 
integration  of  Israeli  carriers  into  existing  alliances  of  Community  air  carriers  thus 
allowing for the development of integrated products and better services to passengers 
and higher efficiency through economies of scale. 

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EUROSTAT Statistics in focus, 37/2005, ISSN 1561-4840 
Annex  to  the  Communication  from  the  Commission  "Developing  the  agenda  for  the  Community’s 
external aviation policy " COM(2005) 79 final 

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Obviously, it will be of paramount importance to ensure that opening and integration 
of  markets  is  undertaken  in  a  balanced  manner  that  takes  into  account  other 
important policy objectives and mitigates potential adverse impacts. It is essential to 
ensure  that  the  process  of  market  opening  is  accompanied  by  a  parallel  process  of 
regulatory  co-operation  and/or  convergence  with  regard  to  safety,  security, 
environmental, state aid and competition law aspects thereby ensuring a level playing 
field  and  fair  competition  based  on  equal  opportunities.  Open  markets  need  a 
framework that ensures fair competition and high standards for safety and security. 
With  regard  to  environmental  issues,  the  agreement  must  be  consistent  with  the 
Community’s  commitment  to  sustainable  development.  It  is  important  that  the 
agreement  does  not  restrict  the  EU’s  ability  to  apply  regulatory  or  economic 
instruments to mitigate unwanted side-effects of growth in air traffic, notably on the 
air  quality  and  noise  levels  around  airports  and  through  the  contribution  to  global 
climate change. 

It  is  of  political  and  economic  interest  to  the  EU  to  ensure  the  implementation  of 
common  standards  compatible  with  European  standards  in  its  economic  relations 
with  the  Mediterranean  partners  (see  also  Article  47  of  the  EU-Israel  Association 
Agreement). This can only be done through a comprehensive agreement negotiated 
at Community level which provides for mutual recognition of aviation standards and 
procedures.  The  final  aim  of  the  agreement  will  be  the  integration  of  the  Israeli 
aviation  sector  into  a  Common  Aviation  Area  with  the  European  Union  and  the 
harmonisation  of  legislation  through  mutual  recognition  in  key  areas  of  the  EU 
aviation legislation. 

Proposing  a  comprehensive  mandate  for  the  negotiations  with  Israel  would 
demonstrate the EU’s commitment to open markets, to seek regulatory convergence 
of safety and security standards and to the sustainable development to its neighbours. 
An  EU-Israel  aviation  agreement  could  have  wider  economic  implications  for  air 
transport between the EU and other neighbouring countries on the Southern Borders 
of the EU and could increase regional cooperation. 

As  this  Communication  has  shown,  Israel  has  declared  its  readiness  to  launch  the 
integration  into  a  Common  Aviation  Area  with  the  EU.  This  will  imply  Israel’s 
capacity  to  harmonise  it  aviation  standards  with  those  of  the  EU  through  mutual 
recognition, thereby establishing a solid legal framework for aviation relations.  

5. 

CONCLUSIONS  

The  Commission  therefore  considers  important  to  offer  to  Israel  a  comprehensive 
scope  for  strengthened  co-operation  in  civil  aviation.  The  agreement  with  Israel 
would  establish  an  ambitious  framework  integrating  wider  aviation  issues  such  as 
regulatory  co-operation  in  the  fields  of  aviation  safety,  security,  air  traffic 
management,  technology  and  research  as  well  as  “doing-business”  issues  and 
industrial co-operation. 

The  civil  aviation  sector  offers  significant  new  opportunities  for  further 
strengthening transport sector co-operation and mutual benefits of Israel and the EU. 
Efforts should therefore now be made for air transport to become a key area of closer 
co-operation  between  the  EU  and  Israel  thus  offering  Israel  a  further  example  for 

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integration  into  European  structures  and  markets.  The  agreement  will  be  an 
important  step  towards  the  realisation  of  a  Common  Aviation  Area  between  the 
European  Union  and  its  Mediterranean  neighbours  which  is  a  key  objective  of  EU 
external aviation policy, and an important element of EU external policy. 

A Community level aviation agreement will be able to fulfil the Israeli aspirations to 
be better integrated into European aviation structures and to combine the benefits of 
market opening with cooperation in the regulatory, technical and industrial fields in 
order to achieve a level playing field for operators and advantages for consumers.  

The  substantial  political  and  economic  added  value  of  an  air  transport  agreement 
with Israel could – in the long term – encourage further countries in the region and 
help increasing regional cooperation in the Middle-East. 

In the light of the above, the Commission proposes the negotiation and conclusion of 
a  comprehensive  open  aviation  agreement  with  Israel  and  invites  the  Council  to 
authorise the Commission to enter into negotiations on such an agreement. 

The  Commission  will  work  closely  together  with  Member  States  and  all  relevant 
stakeholders  in  further  developing  and  achieving  the  objectives  set  out  in  the 
proposed Council Decision. 

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