Eilat Mayor Yitzhak Halevy and tourism officials in the resort town are threatening to take action against Arkia Airlines Ltd. if it does not withdraw a proposal to fly to Aqaba in Jordan.
Arkia's proposal is in response to a decision by Minister of Tourism Stas Misezhnikov to allow El Al Israel Airlines Ltd. (TASE: ELAL) to make domestic flights to Eilat from Ben Gurion Airport in competition against Arkia and Israir Airlines and Tourism Ltd. That decision was partly in response to lobbying by Halevy and others.
Eilat is Arkia's core business, and the airline warned that allowing El Al to fly the route jeopardized its revenue and could cost hundreds of jobs. In an effort to minimize the damage, Arkia announced that it would fly to Eilat's rival Aqaba, and offered low-cost package deals, in direct competition to Eilat hotels.
Israeli vacationers have been showing interest in Aqaba, whose tourism business has been growing rapidly as it attracts global luxury chains. Meanwhile, El Al has not yet launched an Eilat route. As a result Halevy convened a meeting of Eilat's tourist leaders.
In a letter to Arkia owner Avi Nakash, Halevy said, "I see fit to bring to your attention the content of this meeting, in the hope that Arkia's management will consider its steps and continue to operate for the good of the development and prosperity of Eilat."
Arkia CEO Gadi Tepper wrote back, "For decades, Arkia considered the strengthening of Eilat as an essential national goal and linked its fate to the fate of the town… However, despite repeated approaches to tourism officials in the town and its mayor, they turned their back on Arkia. Regrettably, Arkia found that it erred, and that the Eilat Municipality and hotel owners in the town abandoned it when it needed them the most."
Published by Globes [online], Israel business news - www.globes-online.com - on April 27, 2010
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