Love ‘em or loathe ‘em – that seems to be the consensus after El Al’s two-day
strike last month. El Al, Arkia and Israir called the strike over the
government’s approval of the Open Skies agreement between airlines inside the
The strike by those three Israeli airlines was ludicrous
at best and litigious at worse.
For two days we heard the senior
management bemoaning the agreement on one hand, yet vociferously stating they
weren’t against competition. All they wanted was a level playing field. To say
that many farms in the Galilee could have fertilized their fields with the
garbage that was being transmitted would be impolite.
Suffice to say,
that the real reason for the strike – which could have been averted – was the
desire to lower El Al’s participation in her security costs. For the past few
years, the Israeli government picked up 80% of the costs associated with
security, leaving 20% the responsibility of the airline.
incur higher costs than any other airline. To simply fly to any destination
requires a huge investment by Israeli security services in that foreign city. Be
it Mumbai or Los Angeles, Israeli security personnel are at the airport before
There are plain-clothes agents and fully armed personnel
patrolling the premises for explosives, suspicious behavior and other threats.
Inside the terminal, passengers and their baggage are checked by a trained team.
Aside from the technology that has been developed, which has been generously
shared with hundreds of airlines throughout the world, the constant vigilance
does not come cheap.
After two days of the strike, forcing more than
4,500 passengers to make alternative plans, the government agreed to raise their
participation to 97.5 %. Yes, El Al will now save $33 million per year but what
have they lost? The strike ended late Monday night, April 22. For two days,
thousands of passengers were forced to delay their flights or purchase tickets
on other airlines. Stranded in hotels throughout the network that El Al flies,
their costs kept ballooning as their frustration at El Al (Arkia and Israir
passengers have lower expectations) grew.
Communication on the first day
was abominable. The strike commenced at 5 a.m. and those passengers due to fly
out early in the morning had their flights brought forward and were able to
depart the country.
However, the majority of El Al’s flights are
scheduled well after 5 a.m. and only at 5 p.m. did El Al send out instructions
to travel professionals what options were available for stranded customers.
Their reservations call centers had people on hold for hours and, when reached,
the El Al employee could give no guidance on what they should do. Frenzied
clients threatened to sue their travel agency, the airline and the entire
Histadrut. Rival airlines fattened up on the absence of El Al.
recalled that the last El Al strike lasted over a month. Panic started to seep
in as future bookings for this spring and summer were quickly shifted to other
airlines. On the second day, communication was a little better; El Al management
finally agreed to endorse tickets over to foreign airlines for stranded
passengers. While their intention was good, the reality was that by this stage
those airlines were already full with their own passengers and those clients who
chose not to wait for any largesse from El Al.
The genius, though, of El
Al’s CEO, Eliezer Shkedi, was to get the airport workers to threaten an airport
strike at Ben-Gurion Airport, effectively shutting down all flights in and out
of Israel. The government, already not objecting to increase their participation
in the security costs, added that extra 17% and the three striking Israeli
airlines folded immediately. The strike ended and the damage control
Full page ads appeared in the Israeli newspapers the next
“SORRY!” they shouted out. “Dear Customers, Thank you for your
understanding and patience during these difficult days.
We are giving
ANYONE whose flight was canceled a voucher for a BONUS TICKET to one of our
Thus if your flight was canceled on either that
Sunday or Monday anywhere that El Al flew (or didn’t fly in this case) you could
get a bonus ticket. It’s very important to read the fine print. First and
foremost you must request it by phone; they will not send it to your email or
your travel consultants automatically.
This would have been the fairest
way – only El Al has the complete list of their passengers; all have an email
contact be it theirs or their travel consultant.
So El Al knows not
everyone damaged will make the call. Not bad but their next provision is
virtuoso: You cannot make the call yet – yes it’s been two weeks but El Al asks
you to wait a bit longer. You can only call after May 12, almost three weeks
from when the strike ended. Rarely have I seen such an ingenious offer for
compensation like this put forth.
The voucher is valid until May 31,
The blackout dates are reasonable, July 15- August 21, September
12-30 and next spring, during Passover, April 2-24. Please be aware that the
specific economy class required to get a seat, is no different than that given
to frequent fliers.
El Al almost never has more than nine seats on any
one plane in this class so aggrieved passengers need to plan well in advance. As
El Al pointed out this is a bonus ticket, and taxes and fuel surcharge will be
well over $100 to most of the cities that El Al services in Europe.
why did Mr. Shkedi encourage his union to call a strike? How much of that $33
million saved in security cost will be spent on these bonus vouchers?
Professionally, I can report that the longterm financial damage to El Al is
Passengers tend to vote not with their feet but with their
pocketbook. El Al elected to have another spring/summer special which quickly
brought clients flocking back. Still, El Al will enjoy less revenue from these
reduced prices but with $33m. in savings from their reduced security costs, they
have a little wiggle room.
Understanding the crux of El Al’s dilemma
requires a quick comparison of two simple items: number of employees and number
Consider one of El Al’s greatest competitors in Israel –
United Airlines with two daily flights. Blessed with 1,258 planes, it employs
88,253 people, which calculates to 70 employees per aircraft. US Air, with 640
planes and 36,500 employees, beats United with a unit cost of only 57
Turkish Air ups the number to 75 employees per plane, while
Swiss comes in at 85.
El Al has only 38 planes in her entire fleet and
has a workforce comprised of 6,000 salaried people. In other words, El Al
employs almost 158 people per plane. This number must be repeated. For each
plane in operation, 158 are required. This includes sales and marketing, pilots
and flight attendants, mechanics and security staff and of course senior
management across the board.
Is it any wonder El AL has been losing money
the last year? Is it any wonder that an offer to purchase 48% of El Al for only
$75 m. is considered wonderful, with no comments raised at how little the
airline is being valued at? The true bottom line to El Al remains foggy at best,
and it remains to be seen whether senior management in place at El Al are
equipped to handle these challenges.
Mark Feldman is the CEO of Ziontours
Jerusalem. For questions and comments, email him at email@example.com
Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>