Price determines destination for Israeli tourists

Cracow  photo: Shutterstock

In 2018, Israelis preferred Eastern Europe to former favorites Barcelona, Rome, and Paris.

Overseas flights have become a regular part of many Israelis' lives in recent years, rather than a once-a-year event. Israelis made over 8.5 million Israelis trips overseas in 2018. They chose destination they heard about from their travel agents or on tourism websites, mainly because those destinations were cheap.

The reasons that Israelis are traveling more are well-known: greater supply of flights and destinations; the difference between the cost of vacations overseas and in Israel; and the low shekel-dollar exchange rate, which increased Israelis' purchasing power (daily expenses account for half the cost of an overseas trip).

Gulliver Tourism CEO Ziv Rozen says that seasonal charter flights by the low-cost airlines dictated Israelis' new destinations. There is no doubt, however, that the favorite among these new destinations is Eastern Europe. According to Rozen, the number of package tour flights to Eastern Europe soared in 2018, while the number of Israelis visiting former favorites such as Barcelona, Paris, and Rome remained unchanged. Gulliver's figures show that the number of trips to cities such as Poznan, Cracow, and Wroclaw in Poland and Baku in Azerbaijan, which only recently appeared on Israelis' tourism maps, increased by 100-300%.

"Consumers frequently flew to remote places because of the place, not the destination," explains ISSTA Lines (TASE: ISSTA) CEO Ronen Carasso. "We saw Israeli passenger traffic to Lublin, Gdansk, Memmingen, Lyon, and other destinations to which Israelis almost never flew. Israelis are flying abroad more than once a year, so they are looking for new excitement and destinations," he added. "We want to find a new and cheap destination, so the price is what determines the destination."

Rozen says that places in Eastern Europe are aware of the growing demand from Israelis, and are investing in sites, attractions, and tourism events in order to help the tourists enjoy themselves. "In surveys that we conduct among our customers, they expressed particular satisfaction with Eastern European destinations, mainly because of what they get for their money, low living expenses, and the different and satisfactory hosting culture," he says.

According to figures from the Israel Airports Authority, flights by Israelis increased by 40% to Poland, 34% to Georgia, 29% to China, 97% to India, 140% to Azerbaijan, 123% to Moldova, and so on. These figures refer solely to the direct destinations of flights.

The number of Israelis flying to the Far East also rose, including countries to which there are no direct flights from Israel, such as Japan, the Philippines, and Vietnam. The cause is a sharp drop in prices caused by the introduction of flights to Israel by airlines from this region. Rozen says that most of the passengers to destination in Thailand or China use connection flights by three main airlines: Turkish Airlines, Aeroflot, and Ukraine Airlines.

Despite the increase in flights to cheap destinations, the US is still the leading destination for Israelis, many of whom fly there via Turkey. This is the reason that Airport Authority figures show that the country to which the most Israelis flew in January-November 2018 was Turkey. In addition to being a stopover for connection flights to the US, Turkey is also a stopover for connection flights to the Far East. In second place after the US as a final destination for Israelis is Italy, followed by Germany, France, and Greece.

According to figures from Travelist, Barcelona has lost its position as Israelis' favorite destination to Madrid and Rome. The leading trans-Atlantic destination is New York, and the leading trans-Asian destination is Bangkok.

In addition to the attractive Eastern European destinations, Israeli passengers also have an affinity for Greece: both the Greek mainland and its islands. Travelist says that the number of passengers who traveled from Israel to Athens rose 20%, compared with 2017.

Will the price rise?

A comparison between the price of flights in 2018 and 2017 shows why more Israelis are flying. For a connection flight to New York in August, Israelis paid an average of $890 in 2018, compared with $1,100 in 2017, a 20% difference. Flights to Rome in June cost Israelis $270 in 2018, compared with $413 in 2017, a 35% difference. The average price of flights to Barcelona, Paris, London, and Prague showed differences of 15%.

Now that the shekel-dollar exchange rate is rising, will the general prices rises in Israel spread to the civil aviation industry? Rozen believes that prices will not go up; as in other retail sectors, the marketers will benefit from masses of travelers. "A vacation has become a basic consumer product. The frequency of trips will continue rising," he says, adding, "We won't see a drop in prices, although competition will remain intense."

Daka 90 CEO Dana Lavie believes that prices will go up. "We're experiencing the best prices that enable a family to fly an average of three times a year right now. We think that prices will rise." Aviation Links CMO Nir Mazor also believes that prices will rise next year. Among the reasons he cites are the relatively small supply of hotels in the Mediterranean Basin, in comparison with the demand, and the fact that Turkey will stay off the Israeli tourist's vacation map. According to Mazor, vacation packages for Greece will become more expensive, especially all-expenses-paid packages for families ordered in advance.

On the other hand, airlines and air travel enthusiasts focus on fuel prices, which have been going down in recent weeks. This enables airlines to continue competing over price. Since fuel is the single largest component of the ticket price, if the downtrend in fuel prices continues, there is a better chance that Israelis will pay less for flights.

Published by Globes, Israel business news - en.globes.co.il - on December 31, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Cracow  photo: Shutterstock
Cracow photo: Shutterstock
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