Flydubai Incident Sparks Surge in Israeli Airline Stocks

Following an incident on a Flydubai flight to Israel on Wednesday, shares of Israeli airlines El Al and Israir saw significant gains on the stock exchange, rising 7% and 5.4% respectively. Israeli security officials suspect a co-pilot from Oman attempted to crash the Dubai-bound flight, which departed from Dubai at 7:05 AM with 174 passengers, including 27 children, and was scheduled to land in Israel around 9:30 AM.

There is a growing assessment within the Israeli security establishment that the incident was an act of terrorism. This could lead many Israeli travelers to favor Israeli airlines, which employ exclusively Israeli pilots, many of them former Air Force personnel, and benefit from a unique, state-funded security system. Flydubai, an airline based in Dubai, has become popular among Israeli travelers, serving as a key air route for those vacationing in Dubai or using it as a transit hub to other destinations, especially after Istanbul's airport became less accessible for Israelis.

Flydubai operates dozens of weekly flights between Tel Aviv and Dubai, currently holding a 3.5% share of all passengers at Ben Gurion Airport, though it dominates the Dubai route. The airline maintained a consistent presence on flights to Israel even during the recent conflict. El Al holds a 44% market share of all passengers at Ben Gurion Airport, while Israir holds 13.5%.

The incident is expected to severely impact Flydubai's performance in Israel. However, Israeli airlines do not currently fly to Dubai due to security concerns, limiting their ability to directly absorb passengers diverted from Flydubai. Their potential gains would come from a possible decrease in connecting flights through Dubai, encouraging a shift to direct flights with Israeli carriers.