Israel's Airfare Prices May Drop as Competition Returns to Ben Gurion Airport

Israel's aviation market is undergoing a significant shift with the return of major international carriers and an increase in flights from low-cost airlines, potentially leading to lower airfares for passengers. This resurgence in competition aims to break the period of limited choices and high prices that travelers have experienced.

Key developments include the resumption of direct flights to the United States. Delta restarted daily services between Tel Aviv and New York on September 6, followed by United's return to the Newark-Ben Gurion route with two daily flights two days later. Further intensifying competition on this crucial route, Israir is set to launch its own direct flights from Tel Aviv to New York on September 15, with initial round-trip fares starting at $1600.

In Europe, Wizz Air is expanding its presence in Israel, Transavia is reinstating flights to Marseille and Lyon, and SAS plans to resume direct flights to Copenhagen three times a week starting October 26. The increased number of airlines competing for passengers on the same routes is expected to put downward pressure on ticket prices.

While the return of competition creates the conditions for lower fares, a sharp drop is not immediately anticipated. High demand, particularly on routes like Tel Aviv-New York, could keep prices elevated for some time. Additionally, factors such as fuel costs, airport fees, and operational expenses continue to influence pricing. The presence of at least one low-cost carrier on a route has historically been linked to an average fare reduction of approximately 11%, according to a 2024 study.

The full recovery of the Israeli air market is still pending, with major European low-cost carriers like Ryanair and easyJet yet to return. Ryanair has indicated it will not resume flights to Tel Aviv during the winter season, citing issues with flight slots and access to Terminal 1. The current situation is best described as the beginning of renewed competition rather than a full-blown price war. Israeli carriers, which held about 55% of Ben Gurion's passenger traffic in August, will face increasing challenges in maintaining their market share as foreign airlines continue to expand their operations.