El Al petitions High Court over unfair competition on India route

Air India's flight is roughly two hours shorter than El Al's, which is forced to detour by flying over international waters instead of directly over Saudi Arabia.

MARCH 28, 2018 13:38

Updated: MARCH 29, 2018 01:28

Indian airliner makes history by flying to Israel via Saudi airspace, March 23, 2018 (Reuters).mp4

Beleaguered national airline El Al is suing the government at the High Court of Justice as its competitor, Air India, benefits from crossing Saudi airspace.

El Al is citing discrimination as Israeli planes cannot fly over Saudi Arabia while foreign airlines benefit from a relatively shorter route. Instead, El Al must take a circuitous route, flying low over the Red Sea and crossing the Arabian sea.

At a Tel Aviv press conference on Wednesday morning, new El Al CEO Gonen Usishkin and chairman Eli Defes announced that the airliner would be petitioning the High Court and filing a lawsuit against Prime Minister Benjamin Netanyahu, the Civil Aviation Authority, Transportation Minister Israel Katz and Air India.

While the government touts the historic geopolitical breakthrough – that planes traveling to Ben-Gurion Airport can cross Saudi Arabia, a country historically hostile to the Jewish state – El Al is worried about its financial bottom line.

El Al’s New Delhi-Tel Aviv route takes more than two hours than Air India’s new direct route. The longer flight duration drives up fuel costs and requires more crew members, which results in more expensive ticket prices.

Until El Al receives permission from Saudi Arabia to cross its airspace, the Israeli airliner is asking the High Court to bar Air India from taking the shortcut.

“I don’t know what the chances of this lawsuit succeeding because it’s a very political situation,” Noam Pinko, an aviation industry analyst with Psagot Investment House, told The Jerusalem Post.

“There’s no question that El Al is right about this, it puts them in a difficult situation. They’re afraid that not only Air India will fly over Saudi Arabia, but other competitors from the Far East, like from Thailand.”

Both India and Thailand are popular destinations for Israeli backpackers – especially with post-army trekkers – and El Al flew around 60,000 Israelis to India last year.

Another problem is that Defense Ministry and Shin Bet may not have approved the overflights – if an emergency descent requires an Israeli pilot to land in Saudi Arabia.

“If there’s a problem, well, El Al pilots have signed a petition saying that they’re willing to fly over Saudi Arabia,” Pinko noted.

Israel and Saudi Arabia have never set up diplomatic relations, although in recent years the two countries have cooperated on security ties as they both see Iran as a strategic threat.

Ministers like Katz have publicly heralded the Air India route, while Saudi Arabia has yet to comment publicly.

El Al argues that Air India is benefiting unfairly from Israeli and Saudi approval, possibly violating international aviation accords that guarantee fair competition.

It is possible that the airliner could demand government compensation in the meantime.

Before the Air India flight was launched last week, El Al was the only carrier offering direct service between India and Israel.

Israel’s flag carrier, El Al is facing tough times, as the company has been steadily losing market share at its main hub, Ben-Gurion Airport. That is partly due to deregulation and the “Open Skies” agreement, which opened up greater competition from international carriers.

According to data from the Israel Airports Authority, El Al carried around a quarter of all passengers at Ben-Gurion Airport during fall 2017. The company is likely to fall under 30% market share this year – the first time in recent history – jeopardizing the reduced fees and benefits it gets from the Airports Authority.

Many airlines now offer transit services, where you fly non-direct through a hub. That has proven to be a major money-maker.

But for security and logistical complications, El Al hasn’t turned Ben-Gurion into a transfer venue, and today only a few thousand passengers annually transfer through the airport.

In recent months, the company’s stock has plummeted – falling from NIS 3.33 a share in August to NIS 1.14 as of trading on Wednesday. That has wiped out more than half of El Al’s market capitalization.