Israeli Airlines Dominate Ben Gurion Airport Amidst Reduced Competition and Rising Fares

Ben Gurion Airport (TLV) has seen a significant shift in its competitive landscape, with Israeli airlines experiencing unprecedented growth while foreign carriers have largely withdrawn. Passenger traffic at TLV has nearly recovered to pre-October 7 levels, with international flight numbers even increasing slightly in September compared to the previous year. This recovery is largely driven by a surge in passengers flying with Israeli carriers El Al, Israir, and Arkia, which saw a 74% increase in passenger numbers.

This growth in Israeli airlines was facilitated by fleet expansion, increased wet-lease agreements with foreign companies, and flexible aviation agreements. This strategy aligns with the liberalization process initiated by the Airports Authority in 2006, including the "Open Skies" agreement with the EU in 2013. However, this rise in domestic airline activity has coincided with a sharp decline in market competition.

The primary reasons for this reduced competition are the cessation of operations by 31 foreign airlines that flew to TLV before the war, coupled with a significant increase in market share for El Al. This trend of decreased competitiveness and increased market concentration is also evident in the air cargo sector.

Currently, around 25 to 30 airlines operate regularly at TLV, including the three Israeli carriers and approximately 20-25 foreign airlines. However, the number of active foreign airlines fluctuates weekly due to security changes and periodic cancellations, leading to substantially lower competition compared to pre-war levels.

The sharp decline in competition and the strengthening of a few select operators are directly impacting Israeli travelers. The departure of 31 foreign airlines has significantly reduced seat availability, causing airfare prices to skyrocket, particularly on popular routes where Israeli carriers now operate almost exclusively. The high market concentration shifts bargaining power from consumers to airlines, leading to stricter change and cancellation policies and a reduced incentive for improved services or attractive promotions. This situation creates an unprecedented dependency of the Israeli public on a small number of local players, making the entire population vulnerable to pricing changes, fleet adjustments, or schedule alterations by these carriers.