In a move that promises to drive down the price of airfares to Israel, the Israeli government has approved Israir’s application to operate as a regularly scheduled designated airline between the United States and Israel, pitting it in direct competition with El Al Airlines.
Israir, which until now has operated as a charter service, said that beginning in June it would operate one flight a day to Israel, except on Shabbat. It is currently operating three flights a week.
"There is no question that there is a boom in tourism to Israel, and we expect the boom to continue," said Stuart Katz, Israir’s manager for North America. "We want to make sure that the public is able to go at affordable rates, whether they are coming for the first time or a repeat visit."
But El Al Airlines said in a statement that it would challenge the decision in Israel’s highest court, calling the move a "gross breach of the commitment" made by the government to its owners when the airline was privatized in 2003.
Yisrael Borovitch, board chairman of El Al, was quoted as saying the decision "sends out an extremely negative message that would harm our future privatization, which is of much benefit to the government. It diminishes the trust of potential investors in government decisions and promises."
The Web site of the Israeli business publication Globes said El Al presumably would ask the High Court of Justice to issue an interim injunction to block implementation of the decision, which is effective for two years. Globes said Israir was scrambling to quickly obtain the necessary permits from the U.S. (designated carrier status is part of bilateral diplomatic relations) in order to reduce the chances that the court would grant El Al’s request.
The Israeli government’s decision to grant the Israir application was made by Tourism Minister Avraham Hirschson, who told a Tel Aviv news conference that in light of information he was given "regarding a significant rise in the number of passengers on the trans-Atlantic route, there is a blatant and essential public interest in the appointment of an additional designated carrier on the Tel Aviv to New York route."
Katz said, however, that although the government action would now allow Israir to expand its operations in the U.S., no decision has yet been made on how to expand here.
Israir, which was started in 1996, now flies out of John F. Kennedy International Airport, and Katz said it has not been determined if the additional flights would originate from New York.
"We’re looking at possibly another gateway in the U.S.," he said, mentioning Washington, D.C., and Baltimore.
Katz said Israir is currently leasing one plane, a 767-300, with room for 260 passengers. It has two types of service, business class and economy. The airline uses the same security service as El Al, he said.
El Al operates 747-400 and 777 planes on the New York to Tel Aviv route, which carry 408 seats and 282 seats, respectively. Both have personal TV screens at each seat. El Al operates three levels of service: first class, business and economy.
Katz said Israir plans to lease another Boeing plane, probably another 767-300, and that "we hope to have an advanced entertainment system for the new plane."
He said Israir believes the additional tourist traffic to Israel could add another 4,000 people to the tourism industry in Israel, pumping as much as another $100 million into the Israeli economy.
"This is a real victory for the State of Israel," Katz said.
He noted that Israir is considered a budget carrier whose off-peak rates start at $249 each way.
"During the summer you can find fares as low as $349 and $399," Katz said, adding that there is limited availability.
"I think [this decision] will allow fares to remain competitive and affordable," Katz said.
Asked Israir’s published fare, exclusive of taxes and security fees, Katz said it is $898. But he pointed out that the airline offers "affordable packages."
Arie Sommer, Israel’s tourism commissioner for North and South America, pointed out that Delta Airlines plans to begin regularly scheduled flights between Atlanta and Tel Aviv on March 27. He said competition should drive down prices on the New York to Tel Aviv route.
"I’m not an expert on airfares, but I believe the market can absorb a fare of $600 or $700," Sommer said. "I’m going to Israel tomorrow and I paid $1,200: and I’m going economy. It’s unbelievable."