Tens of thousands of Israelis and foreign travellers were stranded this week as the employees of three Israeli airlines, El Al, Arkia and Israir, went on a two-day strike.

This was the first major showdown between the new Netanyahu government and the trade unions, and ended on Monday night in a compromise deal.

The strike was called after the government approved an “open skies” agreement between Israel and the EU, which the airlines’ employees unions claimed could cause the Israeli carriers to go out of business.

The agreement, which was signed last December by the Council of Europe ministers, has been the subject of negotiation between Israel and Europe since 2008. Its aim is to allow more foreign airliners to operate flights to and from Israel, add destinations and frequencies and bring down the ticket prices.

The three Israeli airlines have said that due to heavy security costs, the lack of convenient landing slots in European airports and the fact that they are not members of any large international airline partnerships, they will not be able to compete with foreign carriers.

Despite these warnings and a decision by the airlines’ unions to strike, the government voted on Sunday morning in favour of the agreement.

In an attempt to avert the strike, the government offered to cover 97.5 per cent of the security costs of Israeli airlines. It currently covers 60 per cent, which was to rise to 80 per cent under the open skies agreement.

Although the unions called off the strike, an airline industry insider warned that “the situation still remains problematic.”

The new agreement will be implemented only gradually. On major routes, such as London-Tel Aviv, only three new weekly services will be allowed each year, so it could take time for prices to go down. Other routes, however, including those to Eilat, could become much cheaper as airlines such as Ryanair are planning to start flying there.