Will Air Haifa be stillborn?

Haifa Airport  credit: Shutterstock
Haifa Airport credit: Shutterstock

There are some very prominent names behind Israel's new airline, but aviation experts cast grave doubts on its chances of success.

This summer a new Israeli airline, Air Haifa, is due to start flying, with a promise of attractive fares, as a "low-cost" carrier. The company refuses to give further details, but industry sources have already begun to examine the challenges it will face, among them what they say is a limited airport in Haifa, from which Air Haifa plans to operate, and the expected business model, which raises doubts as to whether the airline will be profitable, and able to offer cheap flights in the future.

Some prominent names are behind the company. Among the founders are Palo Alto Networks founder Nir Zuk; Strauss Group CEO Shai Babad; former El Al CEO Gonen Ussishkin; former El Al chief commercial officer Michael Strassburger; and former ZIM CEO Rafi Danieli.

The company chose not to comment on when it will begin operations, but "Globes" has learned that it has started recruiting employees. Minister of Transport Miri Regev recently announced that Air Haifa would begin operating this June, but it is believed that this will actually happen in July. Initially, domestic flights will be operated between Haifa and Eilat. Flights to Cyprus will begin later on.

While aviation industry experts agree that this will be a boon to people in northern Israel, they express doubts. According to them, although the new airline could reduce congestion at Tel Aviv’s Ben Gurion Airport, and provide passengers with rapid service, it will encounter difficulties.

A problematic airport

Haifa Airport is the oldest in the country, built by the British in 1934, before the State of Israel was founded. The airport, at the eastern entrance to the city, served the Royal Air Force and the jointly owned Iraqi-British oil company. When the British mandate ended, the airport was transferred to the Haifa municipality. Today, it is run by the Israel Airports Authority.

No Israeli airlines currently use Haifa Airport. Arkia CEO Oz Berlowitz explains that one of the reasons that his company ceased operating at the airport was the failure to extend the length of its runway to accommodate large aircraft. "The length of the runway at Haifa doesn’t suit the size of our aircraft. It’s a pity that the State of Israel chose to expand the Haifa seaport without considering the widening and lengthening of the runway," he says.

The existing runway is 1,200 meters long. If it were lengthened to 1,500 meters, Berlowitz says, "Arkia would be able to operate flights from it to nearby destinations and the Greek islands, flights taking an hour and a quarter. Had they lengthened the runway to 1,900 meters, we would have been able to fly to destinations in Europe."

Dr. Uzi Freund-Feinstein, a lecturer on transport and tourism at Kinneret Academic College, says, "The airport at Haifa is limited because, since the British left, structures have been built around it, Oil Refineries for example, that make it difficult to extend the runway in that direction, while in the other direction is the sea. When the Chinese seaport was built in Haifa, that created additional limitations for the airport." He adds that the airport has insufficient parking or public transport access.

International airlines have used Haifa Airport in the past. "TUS Airways (a Cypriot airline, S.L.) quickly realized that it had no future there," Freund-Feinstein says. The Israel Airports Authority says that, even before the war, the only aircraft using it were those serving the offshore gas platforms.

"Zero chance"

"The chances of an airline like this succeeding are practically zero," says an aviation industry source. "There was room for the company when there was normal aviation in Israel. It’s hard to estimate how many flights the company will actually operate weekly, at most four is my guess, and to be economic you have to fly much more."

Freund-Feinstein also thinks that the company won’t find things easy. "In the short term, it might succeed, but I’m dubious about the medium and long terms. There are some very serious and experienced people behind Air Haifa, but it’s unclear how this business will work. They want to set up an airline that it is claimed will be low cost, with turbo-prop planes. That means that the flights will be short-range, and will carry fewer than eighty passengers.

"Besides the fact that Haifa Airport is limited, low-cost airlines don’t use planes like these. They have to reach a high volume of activity quickly, they need a terminal that can accommodate enough passengers. Low-cost airline planes are mostly of the order of 180 seats. When we look at other low-cost companies, they need as many passengers as possible in order to be economically worthwhile. "

Turbo-prop aircraft are economical on fuel, but, as the experts explain, it’s hard to make money when there are few passengers. "An 80-passenger plane requires two pilots and two stewards. They will probably work on a minimum expense format. When they say low cost, they mean that the operation will be cheap, but not necessarily the fares," says Freund-Feinstein. "When we think of low cost, we generally think of flights costing €10. But there are instances in which companies keep costs low, and fares high."

Published by Globes, Israel business news - en.globes.co.il - on April 4, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Haifa Airport  credit: Shutterstock
Haifa Airport credit: Shutterstock
Karish rig  credit: Eyal Izhar Kesem Energy signs gas deals worth $2.8b

The power plant, scheduled to begin operating in 2029, will buy gas worth $2 billion from Energean and a further $700-800 million from the Tamar partners.

Kosher for Passover Coca Cola bottles credit: social media Why are yellow cap Coca Cola bottles different from all others?

Nostalgic Coca Cola aficionados claim that the kosher for Passover version, made from sugar cane instead of high fructose corn syrup, is the genuine taste of the soft drink.

Avigdor Willenz credit: Intel Exclusive: Avigdor Willenz's Element Labs raises $50m

The Israeli startup is developing AI processors for inference, the stage in which AI models are activated after they have already been trained.

Ilya Sutskever credit: Cadya Levy SSI hiring dozens in Israel

AI company Safe Superintelligence is hiring many dozens of people in Tel Aviv, "Globes" has learned.

Johny Srouji credit: Amos Ben Gershom GPO Apple SVP leads senior delegation of execs to Israel

Jony Srouji: I am always filled with renewed energy and optimism about our shared achievements when I visit our R&D centers here.

Israeli apartments Credit: Shutterstock Apartments sold and rented

A selection of recent real estate deals in Israel in Tel Aviv, Ramat Gan, Petah Tikva, Givat Shmuel, Tiberias and Dimona.

Infinity Tower Tel Aviv credit: Courtesy Hagag Group French investors buy 2 Tel Aviv apartments for NIS 27.5m

The two apartments are in Hagag Group's Infinity Tower in the Summeil district.

El Al plane credit: Shutterstock El Al receives state approval to distribute dividend

The Israeli airline has now announced that it will be able to distribute up to 30% of net profit in 2025 and up to 40% in 2026-2028.

groundcover founders credit: Yossi Yarom Israeli observability co groundcover raises $35m

groundcover has developed a “Bring Your Own Cloud” (BYOC) observability solution, redefining the architecture of a modern observability platform.

Tel Aviv Stock Exchange credit: Shutterstock MagioreStock Foreign investment in TASE hits five-year high

Foreign investors have been flocking to the Tel Aviv Stock Exchange in recent weeks, the TASE research department tells "Globes."

Elbit Systems tank turret systems credit: Elbit Systems Elbit Systems wins $100m tank turret systems deal

The Israel defense electronics company will supply its advanced UT30 MK2 unmanned turret systems to General Dynamics European Land Systems (GDELS) to be supplied to a NATO European country.

Tomer Weingarten Photo: PR Trump targets SentinelOne exec in act of revenge

The US administration has suspended the security clearance of the company's chef intelligence and public policy officer Chris Krebs and everyone associated with him.

Tel Aviv Stock Exchange share prices rising credit: Tali Bogdanovsky TASE opens sharply higher after Trump U-turn on tariffs

The pause is being interpreted as a climb down after US President Donald Trump admitted he had made the move to calm the markets.

Ashot Ashkelon credit: Ministry of Defense Up 250%, Ashot Ashkelon wins another Defense Ministry order

The Israeli defense company's share price has risen 250% in the past three years since FIMI Opportunity Funds acquired control.

Liad Agmon credit: Eyal Izhar Insight Partners Liad Agmon steps down as managing partner

Serial entrepreneur Agmon has served as a partner at Insight Partners Israel alongside Daniel Aronovitz who set up the Israel office.

Shekels credit: Shutterstock Vladerina32 Shekel slide resumes amid escalating tariff war

The Bank of Israel is not expected to intervene in the forex market despite the sharp depreciation of the shekel.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018