There can be no disagreement that El Al must feel like a turkey around
Thanksgiving. Feted and fattened as if there is no tomorrow, El Al has been
feasting during the last few months blissfully unaware that the fog around it is
Recently it proudly announced that its third-quarter
growth this year increased more than 245 percent. In real figures, for three
months, net profit grew from $12.3 million to $42.50 million. No doubt senior
management, led by retired air force chief CEO Eliezer Shkedi, was almost giddy
with the results.
Proud they should be and all of 2010 should see stellar
results. The question, though, is what part management played and what part the
recovering economy played? Here’s a number you don’t hear El Al management
discussing: El Al has lost 28% of the market share on flights to the US over the
last three years. Try to grasp these numbers – over one in four passengers who
flew El Al in the past elected to fly with another carrier. Keep in mind that
the most profitable route from Tel Aviv is to the US, New York in particular. So
what’s changed so dramatically that clients, groups and delegations that proudly
chose to fly the “national carrier” of Israel now arrive and depart on other
airlines? A bit of background on these uppity airlines that have nipped, nay
feasted, on El Al’s North American routes.
First off is Continental
Airlines, more than 10 years flying nonstop to Newark with two daily flights.
Followed closely by Delta Airlines, which flies daily to JFK and, several times
a week, nonstop to Atlanta.
Add to the mix US Air, heading into its
second year of operation, and flying nonstop to Philadelphia. Last but not least
comes Air Canada, flying nonstop to Toronto but marketing itself wisely with its
connections to the US.
In these days of invasive pat downs and indelicate
full body scanners, the mere mention of El Al easily tops the list of potential
clients’ security issues. No airline or government would contest El Al’s basic
tenet: for security, both on the ground and in the air, it is deservedly rated
the best in the world. Moreover El Al’s aircrews are fortunately chosen from the
elite of the Israel Air Force, adding another layer to the overall feeling that
when flying El Al, your life is in good hands.
So how did El Al, with its
esteemed management, lose 28% of its most profitable market in such a short
time? First, there is the service level. Part and parcel of the Israeli DNA
inbred on most flights is that passengers feel a deeper kinship when flying El
Al. The average passenger blithely assumes El Al is state owned, forgetting that
long ago it became a private company. This shared ownership leads fliers to feel
more at home. The warm fuzzy feeling leads passengers to stand in the aisle and
kibbitz on their cellphones during takeoff and landing, well after being told to
turn off their electronic equipment.
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While few passengers actually know
someone who works at El Al, this misguided sense of ownership rubs many fliers
the wrong way. The aircrew is often left pleading for passengers to get back to
their seats and turn off their phones, and sometimes the crew has to become
Just recently a longtime frequent flier of EL Al
returned home on Continental. Calling me up, he went on and on about how nicely
the stewards on Continental treated him. It’s a comment that reverberates
throughout the industry. As much as people tease and taunt about the rationale
of American customer service, on the US airlines, be it Delta or US Air or
Continental, it’s an integral element. While the fake flattery of “have a nice
day” may rattle some people, the vast majority prefer it.
reason for El Al’s precipitous drop is the US cities it flies to: Newark, New
York and Los Angeles. That’s it. No longer to Chicago, hasta la vista to
El Al, for reasons that management holds closely to its chest, no
longer services these two cities. No insult to New York readers, but the Big
Apple really isn’t the center of the US. In fact it may come as a big surprise,
but a sizable number of passengers don’t desire to fly into New
Washington beckons them; Silicon Valley in Northern California has
its fans; the entire Bible Belt of the southern US, led by the Evangelicals
traveling to Israel. None of these regions is serviced by El Al.
most travel professionals and Internet sites, when asked for flights beyond New
York, rarely recommend El Al.
Why in these days of airline delays,
increased security and weather related issues would you want to fly two separate
airlines to your desired destination? Surely it makes most sense if I’m flying
to Dallas, to use, for example, Delta via Atlanta or JFK to get there. Yes I’ll
still need to collect my luggage and go through US passport control, but I’ll be
switching from one Delta flight to another Delta flight.
El Al would have
you continue with one of its partner airlines, be it American Airlines or its
newest partner, JetBlue. And if your EL Al flight arrives late, no doubt
American will hold your flight or put you on the next available airline,
correct? Sorry, you’ll be firmly told to go back to the El AL terminal as the
ticket “belongs” to it and that it will rebook you. For years, I’ve warned El Al
repeatedly this is the most relevant reason not to fly it beyond its point of
origin. We know that flights have delays; we know that weather can cause a
delay; all the passenger wants is not to be shunted back and forth between
airlines like some yo-yo.
The third factor, price, is one that the
management of EL Al has fine-tuned to great effect over the last 10
Hence its excellent returns. El Al is competing primarily on the
route to Newark and JFK. Assiduously matching whatever specials Continental or
Delta comes out with, it often acts as a loss-leader in introducing inexpensive
fares in both economy and business class.
As the only airline flying
nonstop to Los Angeles, El Al charges a premium on this route. While my numbers
show passengers shunning the flight because of the high fare, management assures
me that the flight is both full and profitable.
Long ago I learned never
to argue with the logic of airlines. Skeptical I shall remain, though. So
management does have a right to crow, but unlike the skies over Israel these
days, the clouds above continue to darken.The writer is the CEO of
Ziontours Jerusalem. For questions and comments on all travel related topics,
e-mail him at email@example.com.
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