Travel Trends: Opening the low-cost skies

The ministry is in the process of setting up a joint research team to test a series of routes on which it was possible for low-cost carriers to operate in Israel, Itzkovich said during a tour of Ben-Gurion Airport.

September 7, 2006 07:28
Travel Trends: Opening the low-cost skies

israair plane 88. (photo credit: )

Over the last two years, the tourism industry has latched onto certain catch phrases to grab the public's attention and alert it to its plight. Whether tourism was on the up or in lean years, the industry has become quite adept at using statistical trends to point out the value of investing in the right places and adopting certain policies. One phrase that has certainly occupied prominent headline space has been the debate over "opening the skies," or more correctly, the liberalization of Israel's aviation policy, which means to what extent the government will open the aviation market to competition - a balancing act it needs to play when considering the viability of the local market. Indeed, the Transportation and Tourism ministries, often with varying approaches, have almost played into a no-win situation as they try to please both foreign airlines, which are increasingly seeing Tel Aviv as a profitable route, and El Al, which, two years after moving into private hands is having one of its toughest years ever. The issue came to the fore again this week after newly appointed Tourism Ministry Director-General Nahum Itzkovich said his office would continue to work towards "opening the skies" by encouraging more low-cost carriers to fly into Tel Aviv. The ministry is in the process of setting up a joint research team to test a series of routes on which it was possible for low-cost carriers to operate in Israel, Itzkovich said during a tour of Ben-Gurion Airport. A number of key low-cost companies, including Air Madrid and German company HapagFly, have started operating the Tel Aviv route in the last year, having received financial guarantees from the Tourism Ministry to fill the gap left from unfilled capacities. This has pleased neither El Al, which pointed out after the war that its charter subsidiary Sun Dor should be entitled to the same guarantees, nor the foreign airlines, some of which feel the reward may be misdirected. "We stayed in Israel through the intifada and have increased our capacity since, and they are throwing big parties for them," said one airline manager. For the consumer, however, the presence of low cost carriers cannot be a bad thing because as the name suggests, they would profess to introduce lower prices to the market. And in an airline industry that often focuses on the profitable business class sector, the Tourism Ministry, in aiming at the low-cost market, is hopefully driving a trend for which their is not over supply and which will trickle down to the consumer. Either way, traffic through Ben Gurion-Airport could do with a boost after the war drastically slowed the flow of passengers over the summer. The Israel Airports Authority said that 1.94 million travelers passed through the airport in July and August, which was 16 percent fewer than the 2.25m. forecast in the run-up to the season. The figure was also 5.5% less that the parallel two-month period last year. The IAA noted, however, that there was still an increase in the number of flights operating on the Tel Aviv routes. July saw an 8.2% rise in flights landing and taking off at the airport, while in August there was a rise of 5.4% compared to July-August last year. So far in 2006, from January to August, the IAA has counted a 5.8% increase in passenger passage at the airport and a 9.9% growth in runway usage, when compared to the parallel period in 2005. With fewer tourists gracing the country, the tourism industry continues to reel as regards the effects on its business and the sector as a whole. Shmuel Marom, chairman of the Israel Incoming Tour Operators Association, said that over 200 jobs had already been cut in the industry because of the war and that at the same time salaries had been cut. The organization said it estimated the direct damage to incoming tourist organizations amounted to $15 million. The most influential players in the industry, including Tourism Minister Isaac Herzog and airline and hotel officials, are scheduled to meet in Haifa on Thursday at the IITOA's annual gathering to discuss ways to increase tourism to the North and to foreign arrivals in Israel. Fattal buys Berlin hotel Meanwhile, Israeli hotel companies are continuing there investments abroad after the Fattal Hotel Chain bought the Apart Hotel in Berlin, Germany for $10m. The acquisition was the chain's third in Berlin this year after buying 35% of the Excelsior and Steinpfitz in March. The three-star Apart Hotel is located near Berlin's Schoenfeld international Airport and has 148 rooms, five suites, a meeting room for 20 people and a restaurant on site. Africa Israel Hotels also said this week it is expanding abroad and has bought a 50-dunam property in the Southern Russian resort city of Kislovodsk. The company said its investment in $5.5m. investment in the property will enable it to build 350 guest rooms, a spa center and event halls over a 40,000 square meter territory. Continental sign with Amex Continental Airlines said this week it has signed an agreement with credit card company American Express to give passengers benefits on their respective rewards programs. The airline said that passengers who purchase Continental tickets with an Amex card will accumulate points on the credit card company's Membership Rewards scheme. At the same time, each Membership Reward point can be transferred to one mile on Continental's OnePass program. A380 starts passenger tests Finally, European aircraft manufacturer Airbus said its double-decker A380 completed its first passenger flight this week. Some 474 passengers, mostly Airbus employees and cabin experts, participated in the first of a series of four early long flights, which allow Airbus to assess the cabin environment and systems in flight ahead of final certification. The flights took off from Toulouse this week lasting seven, 10, 12 and 15 hours respectively, with one night flight, to cover all types of flight conditions. The A380 has not been without its controversies and delays and resulted in a new chief executive officer being appointed and its chief operating officer in charge of the program Charles Champion resigning. This week the company announced a new head of the program appointing Mario Heinen as Senior Vice President and Head of the A380 Program with immediate effect.

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