El Al to Oz: Is it serious?

El Al CEO Gonen Usishkin Photo: Sivan Faraj

The worse El Al's results are, the more far-flung its destinations become.

It wasn't El Al's week last week. On Wednesday, after releasing its third quarter results, the airline lost about a quarter of its market cap, which now stands at some NIS 500 million. Despite the fact that the third quarter contains the summer vacation season and the Jewish holidays, and despite a fall in jet fuel prices and more fuel-efficient planes in its fleet, El Al's quarterly profit slid by 36%, with stiff competition proving the decisive factor.

That wasn't El Al's only news, however. Alongside the weak financials, the airline announced that it would carry out trials of direct, non-stop flights between Tel Aviv and Melbourne.

This isn’t the first time that El Al has chosen to spice its financial results with a consumer announcement. The worse the numbers, the more far-flung the destinations become. The airline announced the opening of routes to Düsseldorf and Dublin, and then to San Francisco and to Tokyo (from March 2020). Now it has gone further, much further, by announcing that trial direct flights to Australia will take place in the second quarter of 2020.

This announcement gives rise to several questions: Is it a gimmick, an exercise in camouflaging weak results, or a genuine marketing move? Will El Al join the exclusive club of the major airlines that operate non-stop long-haul flights lasting 17 hours or more? And will consumers be at all willing to pay for the pleasure?

Here are the numbers: A non-stop flight from Tel Aviv to Melbourne will take seventeen hours, and the return journey will take eighteen hours, three hours longer that the longest service El Al currently operates, between Tel Aviv and Los Angeles.

Even for journeys of thirteen to fifteen hours, many passengers are deterred by the thought of sitting for so long on a plane, and the choice of a flight with a layover often stems not just from the fact that there is no direct flight or from a lower fare, but from a desire to break up the journey, with perhaps even an overnight stop en route. People travelling from Israel to Australia have several options for flying via Hong Kong, Thailand, or South Korea, flights that take about twelve hours for the first sector and up to ten for the second, or for flying via Europe with one or two layovers.

For El Al, opening a direct route like this requires thorough testing, not just of passengers' stamina, but also of the economic potential, especially as it cannot shorten the route by flying over Saudi Arabia (as Air India does in its direct seven-hour flights between Tel Aviv and Delhi). El Al is considering operating the route with flights ten days apart, which means leaving one of its fleet of 41 aircraft on the ground for several long days.

As they say in the aviation industry, a plane that is not in the air is losing money, and El Al already grounds its fleet every Saturday. What is more, at least two crews will be required on such a long flight. Qantas flights from London to Sydney stop for two hours in Singapore. The passengers disembark to spend a couple of hours in the duty-free shops, the plane is cleaned and refueled, and the crew is replaced.

Qantas, Australia's successful airline, connects the remote island continent to the rest of the world with long-haul flights. It has recently carried out two trial flights on what would be the longest route in the world, a direct, 16,200-kilometer journey from Sydney to New York taking nineteen hours.

"It will be the passengers who decide whether they're happy to fly eighteen hours and pay the cost. That is what will determine whether we continue," El Al CEO Gonen Usishkin told "Globes". "It's an expensive flight from an operational point of view. If the consumer sees added value in it and agrees to pay the premium, which I don't believe will be excessively high, and particularly if he or she agrees to sit on a flight for eighteen hours, we'll be able to decide whether to operate the route."

As Qantas did with the trial Sydney-New York flights, El Al will carry out its trials for the Tel Aviv-Melbourne route using Boeing 787-9 Dreamliner aircraft. And price will indeed be critical.

How much do the longest flights currently available cost? The longest scheduled flight is between Singapore and New York (Newark). It takes 18:30 hours, on a specially adapted Airbus A350-900ULR. The round-trip fare for mid-December is $2,500-2,700.

The second longest non-stop flight is by Qatar Airways between Auckland, New Zealand and Qatar capital Doha. The flight takes eighteen hours, on a Boeing 777-200LR. The fare is $2,800.

The third longest route is operated by Qantas between Perth and London. The flight takes 17:30 hours on an Airbus 380, and the fare is $1,700.

Emirates is also among the airlines with the longest routes. Its flight connecting Dubai and Auckland takes 17:10 hours, also on an Airbus 380, and the mid-December fare is $1,900.

Fifth in the list is the Singapore Airlines non-stop flight from Singapore to Los Angeles, lasting 15:10 hours and costing $2,200.

The conclusion is that if El Al flights between Tel Aviv and Melbourne do become a commercial reality and the idea is not just a gimmick, the round-trip fare will be at least $2,200. Will travelers be prepared to pay a premium of about $500 for what will be El Al's longest flight from Tel Aviv? That is the ultimate question that needs to be answered. Meanwhile, we'll make do with one or more layovers and the opportunity to stretch our legs at another airport or two on the way, which, as mentioned, has its advantages.

Published by Globes, Israel business news - en.globes.co.il - on December 1, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

El Al CEO Gonen Usishkin Photo: Sivan Faraj
El Al CEO Gonen Usishkin Photo: Sivan Faraj
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