Is there room for a fourth Israeli airline?

Passengers at Ben Gurion Airport Photo: Eyal Izhar

The answer is yes, as long as it knows how to implement the low-cost model.

Whether or not a fourth Israeli airline can succeed depends on how the new airline on the block operates. The low-cost airlines, which only started coming to Israel in the past few years, have already managed to take a large slice of the Europe-bound passenger traffic. Hungarian airline Wizz Air, for example, holds a market share of 5.25%, after seeing 20% growth in passenger numbers in the first three quarters of 2019. EasyJet too has a larger market share than Israeli airlines Arkia and Israir, amounting to 4.74% of passenger traffic from Israel, following 16% growth in 2019 compared with 2018. Ryanair, the Irish low-cost airline that is the largest in Europe, and which came to Israel relatively late, grew by 37% in the Israeli market last year. The message is clear: Israeli consumers have adopted the low-cost flight model. The International Civil Aviation Organization estimates that the market share of low-cost airlines in Israel will continue to grow.

If CAL, whether under that name or another (among other things to distinguish itself from the local credit card company of the same name) manages to implement the low-cost model, it will be able to compete with the existing airlines, as long as it keeps its expenses down. Its destinations will presumably be mostly in Europe, and its pricing will presumably be on the low-cost method of a basic fare with separate supplements for every other service, such as luggage and seating. Low-cost airlines don't just operate on a different pricing model; they also fly to less popular destinations or to secondary airports where they pay lower landing fees and taxes. The introduction of destinations such as Cracow, Sochi and Poznan into the Israeli tourist's map of the world had led to a change in his or her way of thinking, and to choice of vacation destination on the basis of price. CAL will also have to play on this splaying field, and, like the other companies on the same playing field, it will have to make its operation low-cost from A to Z, from company headquarters and offices to savings in every way possible on and off its planes.

Published by Globes, Israel business news - en.globes.co.il - on January 6, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Passengers at Ben Gurion Airport Photo: Eyal Izhar
Passengers at Ben Gurion Airport Photo: Eyal Izhar
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