El Al banks on Boeing's Dreamliners


The Israeli carrier hopes the aircraft will attract business class passengers and halt the tourist class exodus to low-cost rivals.

The Boeing 787, the Dreamliner, will arrive in Israel next month. The airplane's speed is the same as the other airliners populating Israel's skies, and it has roughly the same shape as they do, but it purportedly sets new standards in passenger comfort. US company Boeing and El Al Israel Airlines Ltd. (TASE: ELAL) are convinced that the passengers will find it convincing. El Al has ordered 16 of them, making it one of the last two international airlines retaining Boeing as their sole supplier (French company Airbus has already achieved a 50% market share). El Al's Dreamliners will arrive gradually over the next few years, until 2020. In addition, El Al and Boeing have signed an option for the supply of 13 more Dreamliners in the future, "that will more than likely be exercised," according to El Al CEO David Maimon.

Why is El Al maintaining its extraordinary loyalty to the US company? Maimon emphasizes the advantages of working with a single supplier, but also makes it clear that El Al negotiated at length with the French company, "which apparently did not really believe that we were serious, and did not argue over the price." The Israeli airline, which only recently underwent a serious crisis with its pilots that resulted in the cancelation of quite a few flights and damaged the company's reputation for reliability, is keeping its fingers crossed that the new plane will make a difference and bring back the passengers who abandoned it. Did the recent crisis with its employees deal El Al a critical blow?

"You're thinking about the damage after a year," says Maimon, "while I'm thinking about the benefit we achieved in the negotiations for at least 20 years."

47% fuel savings

The first Dreamliner will land in Israel in the second half of August, and the next one in October. The next two will be in February-March 2018. Up until November, the first Dreamliner will fly only to Europe, but starting in November, it can cross the ocean and fly regularly on the Tel Aviv-New York route (to Newark Airport in New Jersey, that is). 150 El Al pilots, engineers, and technicians have been training in Seattle in recent months to operate the plane, and they will train 1,500 employees here in Israel, who will be familiar with the new plane from its first day. At the same time, the old 747s will be put out to pasture. One of them has already been retired, and a second will stop flying at the end of the year. Anyone who wishes, incidentally, can buy the old plane (just the metal bars) for $300,000. The deal with Boeing is costing El Al $1.25 billion. In addition to expectations of regaining passengers and the trust of Israelis, the enormous investment is also supposed to be made back through savings in operating the airliner. Maintenance is believed to be substantially more economical, and the saving on fuel costs is projected to be at least 20%. Outgoing Boeing president and Boeing Corporation deputy chairman Raymond Conner said that the Dreamliner would save El Al 47% of its fuel consumption on the Tel Aviv-New York route, in comparison with the Boeing 747s currently flying on the route. The lower fuel costs are primarily a result of the new plane's structure; it is constructed of larger parts and lighter and stronger materials that make up 50% of the aircraft's body and wings. Its travel distance will consequently also be greater - almost 14,000 kilometers, putting more than 150 new destinations within reach without requiring an intermediate stop.

No turbulence with VP

What technology is to improve the Dreamliner passenger experience? Studies conducted by Boeing showed that among other things, passengers want to feel the flying experience. The lighting system is designed to give them the feeling of skies above their heads, and the airliner's windows are also larger (by about 25%) and higher, so that all the passengers on the plane will see all the windows when passing by them, and will feel the flying experience. In addition, El Al has finally gotten rid of the window shutters (which one passenger sometimes opened, thereby waking up all the other passengers). The window includes a dimmer that gradually allows or conceals outside light under the control and supervision of the airplane staff. Furthermore, according to the company's engineers, the advanced lighting system ensures control of lighting, thereby calibrating people's biological clocks and easing subsequent jetlag.

Boeing's engineers have also taken care of the air we breathe on board the aircraft. The company asserts that the air purification and humidity enhancement system on the plane, combined with an advanced temperature-setting system, induces a more comfortable feeling during and after the flight. A new system of sensors makes sure than the airplane is better balanced and is almost unaffected by air pockets. The company presents surveys showing that 20% of passengers reported that they feel uncomfortable with the air on long flights, while the proportion drops to 3% on the Dreamliner. The entertainment system has also been adapted to the second decade of the 21st century, of course. It includes a HD screen of at least 12 inches, an interactive touch remote control, and a USB port for each seat. In addition, for better or worse, the passengers' separation from what is happening on Earth will also end. In 2018, the new airliner will also include a WiFi system that will enable us to be constantly available for messages and emails.

With all due respect for comfort, there is no avoiding the question of the price. In other words, will the lower fuel costs also be rolled over onto the passenger? Maimon says, "There will be no price reduction, but we could have charged more. All the consultants told us that we could demand and receive a higher price for a Dreamliner flight, but we decided to keep the same price."

Wider gaps between passenger classes

What about the seats themselves and the regular complaints about a lack of leg space? The big news in the new airliner mainly concern business class passengers - further evidence of the widening gap between "ordinary" people and the wealthy.

There has been no significant change in the aircraft's 222 tourist class seats (76-78 centimeters between seats, a 43-centimeter width). It is also clear that the Dreamliner's developers were aware of the fact that airlines now compete mainly in price with the growing and ever-stronger low-cost airlines. At the same time, there is a major difference in business class. El Al is not afraid to admit that businessmen are the company's growth engine, and the Dreamliner is designed, among other things, to bring the business class passengers, many of whom have left for other airlines that offered them better conditions, back to El Al. First class has been canceled, but there are still two classes above tourist class: premium economy, which contains 28 relatively wide seats (96 centimeters between seats and a 48-centimeter seat width), and business first, the new business class, which contains 32 seats that open up to flat beds (198 centimeters, 53 centimeters wide) and provides maximum privacy and isle access for every seat (in a 1-2-1 format). Another innovation is the disabled facilities on the plane, which will finally allow wheelchair-bound passengers to be independent in the plane's spacious bathrooms.

The author was the guest of Boeing and El Al in Seattle.

Published by Globes [online], Israel Business News - www.globes-online.com - on July 3, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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