New report warns cost of flights to Israel could rise after Brexit

BICOM report stresses need for UK and Israel to speedily negotiate trade agreements in the wake of Brexit


A new report into British-Israel trade after Brexit has said there is “significant concern” that the cost of flights between the two countries may rise.

In a detailed analysis of future trade relations between the UK and Israel, the study from the British Israel Communications and Research Centre (BICOM), concluded there is now “exceptional potential for growth in bilateral trade and investment.”

But in sectors such as aviation the report highlighted how there is an urgent need to ensure the continuation of deals negotiated prior to the Brexit vote.

The price of planes tickets on routes to Israel is currently governed the European Union Open Skies agreement.

James Sorene, BICOM’s CEO said: “Britain-Israel air routes have been made more competitive by the entry of Wizz, EasyJet and everyone else.

“If that were to be limited due to problems under the Open Skies agreement, then people would be limited to using just the flag carriers – so EL AL and British Airways.

“As a result of less competition prices are likely to go up.

“This is a problem across the whole of Europe – it is not just an Israel issue. You would hope and expect it would be sorted out and that they manage to extend Open Skies.

“But we are highlighting it as a problem. We have flagged it up as an issue in our report.”

The Open Skies agreement was signed in 2007 and permitted any airline in the EU to fly to any point in the US and vice versa. A deal signed in 2012 provded the same conditions for flights between the EU and Israel.

In positive signs, the BICOM research found there has been a 28 per cent increase in Israeli companies setting up in the UK in the year after the 2016 Brexit referendum.

The consensus among officials from both countries was that a bilateral free trade agreement should be prioritised and agreed as soon as possible. The UK is still the top destination for Israeli foreign direct investment in Europe with 28 Israeli companies listed on the London Stock Exchange with a market capitalisation of £11.5bn.

Israeli business leaders working in the UK in high-tech, fintech, advertising and gaming are largely unconcerned about the consequences of Brexit and continue to be attracted to doing business in Britain, the report says. Some entrepreneurs see the uncertainty, and potential withdrawal from the UK by EU companies, as a significant business opportunity.

The study also noted how agriculture products constitute a significant share of British imports from Israel.In 2016 this amounted to £18.75m worth of potatoes, £18.75m of dates and £6m of avocados. A free trade agreement could lead to much greater quantities being imported from Israel, greater competition with other foreign producers and lower food prices for British consumers.

“We highlight agriculture but at present there is a quota on certain products, “ said Mr Sorene. “There is a possibility further down the line that if there is a deal between Britain and Israel that you could see cheaper fruit and vegetables.”

The report also suggests British companies are failing to take full advantage of investment opportunities in Israel.

Only five British companies have opened innovation centres or acquired Israeli firms since 2014, a much smaller number than companies from the US, China and Canada.

There is also a warning that a new  UK-Israel trade agreement must exclude customs duties on medicines to avoid very significant increases in the NHS drugs bill. At present one in seven NHS drugs are purchased from Israeli pharmaceutical companies.

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