Aviation Competition Heats Up as Airlines Resume and Expand Flights to Israel

The Israeli aviation market is experiencing a surge in competition as international carriers resume and expand their operations. British Airways is set to relaunch its Tel Aviv-London route today after an eight-month hiatus, while Etihad Airways announced it will increase its seat capacity on flights from Israel by approximately 11% starting November 9. These developments follow a trend of foreign airlines returning to Israel, a period during which local carriers enjoyed reduced competition. For consumers, this increased supply of flights is expected to offer more choices and potentially lower prices.

This influx of foreign airlines comes as Israeli carriers, particularly El Al, face a more competitive landscape. However, the market structure has shifted significantly: passengers flying with Israeli airlines (El Al, Israir, Arkia) surged by 74% compared to pre-war figures, while 31 foreign airlines that operated in September 2023 were still absent. El Al, along with its subsidiary Sun Dor, now holds about 50% of the passenger market share at TLV.

British Airways' return to the London route is initially set at one daily flight, down from two pre-suspension, following its cessation of operations in late February due to security escalations. The resumption is significant as London Heathrow is a major European hub, offering onward connections for Israeli travelers. British Airways joins Delta and United, which resumed services in September, increasing competition on routes like New York, where El Al previously held over 92% market share in the second quarter.

Etihad Airways will enhance its Tel Aviv-Abu Dhabi service by replacing an Airbus A321 with a larger Boeing 787 Dreamliner on one of its afternoon flights from November 9. This adds 128 seats daily, increasing its total daily offering from Israel to 1,256 seats, a rise of about 11.3%. The airline attributes this capacity increase to growing demand for connecting flights to the Far East via Abu Dhabi. Notably, Etihad has a code-share agreement with El Al since 2021, meaning this expansion could also benefit El Al's marketing options, though the exact financial impact is unknown.

Meanwhile, El Al is reviving its direct Tel Aviv-San Francisco route, suspended for over six years since the COVID-19 pandemic. The first flight departed last night, operating three times weekly. El Al is expected to be the sole direct carrier initially, but United Airlines plans to reintroduce its direct San Francisco-Tel Aviv service on March 28, 2027, with three weekly flights, potentially doubling direct capacity on the route. This move aims to serve business travelers and tech companies in the Bay Area.

However, not all expansion plans by Israeli airlines are proceeding smoothly. Sun Dor, part of the El Al group, recently postponed its launch to Marrakech due to security restrictions and pending approvals. Arkia and Israir have also faced setbacks with their Morocco routes, highlighting that while foreign airlines are returning to Israel, local carriers still encounter limitations in expanding operations to certain destinations.