So why is El Al making such a racket about Air India?
By MARK FELDMANFile photo of an EL AL Boeing 777 aircraft at Ben Gurion International Airport near Tel Aviv, Israel July 14, 2015. REUTERS/Nir Elias/File Photo(photo credit: REUTERS/NIR ELIAS)
Sometimes an event occurs that transcends basic comprehension. Sometimes an incident materializes that leaves commentators baffled.Let’s set the scene: El Al, the quasi-national airline of Israel, is suing the government of Israel, citing discrimination because a competitive airline, Air India, benefits from crossing Saudi Arabian airspace. In fact El Al’s spanking new CEO, Gonen Usishkin squawked at a press conference that El Al would file a lawsuit against Prime Minister Benjamin Netanyahu, the Civil Aviation Authority, Transportation Minister Israel Katz and Air India.Fact: El Al doesn’t fly to Delhi, the route that Air India inaugurated in March! Not a single media outlet has even reported this fact.Chutzpah is most often defined as audacity, for good or bad. In business parlance, its usage connotes courage or mettle. In Hebrew, though chutzpah is used indignantly, to describe someone who has overstepped the boundaries of acceptable behavior. In traditional usage, the word expresses a strong sense of disapproval, condemnation and outrage. That should be the reaction of the High Court Justices and any intelligent person.El Al has expended an inordinate amount of energy from holding press conferences to reaching out to industry opinion makers. They have described themselves as a poor beleaguered airline forced to turn to the courts as they are worried about their financial bottom line. Their press conference touted that until El Al, too, receives permission from Saudi Arabia to cross its airspace, Air India should be barred from using that route.Fact: El Al only flies into one city in India, Mumbai, which is more than 1,400 kilometers from Delhi – a two-hour flight.Air India’s thrice-weekly nonstop flight to Delhi, flying over Saudi Arabia, takes seven hours and 15 minutes.El Al’s five-times weekly nonstop flight to Mumbai, avoiding flying over Arab countries takes eight hours.Yes, El Al keeps hawking that Air India’s flight to Delhi cuts off two hours, but in reality as long as El Al only flies to Mumbai, the difference is 45 minutes. And if we compare Air India flying to Mumbai, via Delhi, which is the only way to get to Mumbai on Air India, the total flying time would be over 13 hours. Thus no rational customer will ever chose to fly Air India to Mumbai when they can fly El Al nonstop. So why is El Al making such a racket about Air India?Before the Air India flight was launched, El Al was the only airline offering nonstop service between India and Israel.Keep in mind there are two distinct types of traveler who fly to India from Israel. The first picture that pops into one’s mind is backpacking young tourists fresh from their army service, ready to explore every nook and cranny. Over 10 million tourists travel each year to India, exploring the massive subcontinent. In addition to the backpackers, you have the mindfulness- oriented tourists eager to immerse themselves in the local culture.HERE ARE my five top reasons why travel to India should be considered:1. The world’s most famous building: The Taj Mahal is the best-known building in the world. The architecture is sublime, but it is the story that the stones embody that draws seven million visitors each year.2. The madness of Delhi: India’s capital is a pulsating megalopolis that stifles and stimulates in equal measure. Bear with this seething metropolis and it will slowly reveal a side you may not have expected. Discover leafy parks with their early morning yoga classes, get lost in its dusty bookshops, wander around its lavish Hindu temples, listen to the call to prayer echo from timeworn mosques, shop at bustling markets, go to a comedy club and take in a Bollywood show.3. The wildlife is incredible: Experience Rudyard Kipling’s India with a wildlife-watching excursion to one of the country’s many national parks, where visitors can see everything from tigers and elephants to rhinos and rufous-bellied hawk eagles.4.The Golden Triangle: The cities of Delhi, Agra and Jaipur are known as the Golden Triangle because of their cultural splendor, which includes the iconic Taj Mahal and Ranthambore National Park. These cities form the basis of the classic tour of northern India.5.To hike the Himalayas: Though the star attraction of the Himalayas, Mount Everest, lies many hundreds of kilometers away from India on the frontier between Nepal and China, the Indian portion of this epic mountain range offers many attention-grabbing vistas and fine hiking.Fact: Until Air India entered the market, the vast majority of leisure clients never flew EL Al. Not because of security concerns, not because of the age of the very old aircraft El Al used, but because of the price. Most clients, young and old, eschewed El Al’s nonstop flight and saved hundreds of dollars by flying via Amman or Istanbul on Royal Jordanian or Turkish Airline, two airlines who both fly over Arab countries.THE OTHER type of traveler is the business client. He or she is going to India for one thing and one thing only – business.Sadly the hub of India’s business is not located in Mumbai, but in other cities, such as Delhi or Bangalore. Most business clients fly from Tel Aviv on a Sunday, returning to Israel on a Friday.El Al’s least expensive economy class ticket to Mumbai is $1295 with all the taxes included. Turkish Airline’s fare, stopping in Istanbul each direction is $995, also with all the taxes included. Is flying nonstop worth an extra $300? Market forces have led El Al to keep that price differential, so I’ll defer to the airline that they believe they can fill the seats.First and foremost, El Al’s protestation that the shorter flight to Delhi is unfair competition is poppycock. That it will lead to financial loss is another claim that most likely will prove untrue. But not because Air India flies over Saudi Arabia. That nebulous assertion masks a far greater fear and is the true reason why El Al has been making so much noise and turning to the courts.For decades El Al had a near monopoly on destinations to both India and the Far East. It’s only in the last two years, due to the unparalleled success of Transportation Minister Israel Katz. His record on completion of trains inside Israel is spotty at best, but his track record of airlines coming to Israel is outstanding. Air India is the latest airline the Israeli government has wooed; earlier successes include two leading Chinese airlines, Hainan Airline & Cathay Pacific. But as both those routes do not include an Arab overfly, El Al was forced to stew in private.Let’s be clear. The vast majority of readers were not aware of Air India’s entry into Israel until El Al started making so much noise. There were no advertisements of Air India’s flights in the Israelis press and no billboards touting the first-ever nonstop flight into Delhi could be seen along Israel’s highways.Even the travel industry was kept in the dark until right before the first flight with such basic issues as frequency of flights and pricing. Why, you ask? Air India is not addressing the Israeli market, but their own market. In India, full-page ads were taken out in major news outlets. Billboards sprouted up extolling the wonders of the Israeli market. The flights were quickly filling up by Indians planning their inaugural trip to Israel.The Israeli government has been vindicated. Open up the skies and tourists will come here. Money will be expended from the Red Sea to the Golan Heights. A brand new market has been successfully penetrated. But El Al remains peeved.Fact: The underlying reason that El Al has childishly turned to the courts for some type of remuneration is not aimed at Air India, but at other airlines.Senior El Al management, off the record, understand the publicity that Air India has received from this lawsuit only benefits Air India. Their concern are future airlines who may now consider flying to Israel. Singapore Airlines, Thai Air and Qantas have spoken openly about their desire to fly to the Holy Land. A large portion of any airline’s fixed cost is the price of fuel and shortening the flying time will result in lower costs. Whenever possible, an airline attempts to pass the expense on to the flying public.El Al’s policy has always been different. El Al has the monopoly on nonstop flights, for example to both Boston and Los Angeles. Those flights take hours less than any of its competitors, so one could reasonably assume that the load occupancy would come close to 100%.Not surprisingly with the El Al management in place, the fares on both non-stop routes have driven thousands of consumers to fly different airlines. For years, I’ve opined that I’ll never argue with the logic of an airline’s pricing. Surely flying nonstop has a price surcharge? The time saved is considerable and most people will gladly pay the surcharge. But at what price? $100 more, $200 more? What is the price elasticity best attainable? On El Al’s nonstop flights to both Boston and Los Angeles, the vast majority of competing airlines undercut El Al’s fares by a minimum of $300 and on more expensive fares, can reach over $1,000 in savings. My empirical evidence is that while there are consumers willing to pay such a steep surcharge, the majority of the flying public elect to put their backside elsewhere.2018 should be the year of El Al. Labor strife is behind them, new aircraft are arriving every month. El Al should be seeking out new markets, attracting new customers, exploring different pricing mechanisms. Instead, they muddy the waters with spurious claims and insulting lawsuits squarely bringing to the forefront their tepid ability to compete in today’s marketplace.Israeli is gearing up for its 70th anniversary and El Al’s myopic vision is holding it back. Be brave, El Al. Take risks. As Mahatma Ghandi said, “Be the change that you want to see in the world.”The writer is CEO of Ziontours, Jerusalem. For questions and comments, email him at mark.feldman@ziontours.co.il
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