Israeli Credit Card Companies Compete Aggressively to Attract Frequent Flyers with Travel Perks
Israeli credit card companies are intensifying their marketing efforts to attract customers to airline loyalty clubs by offering discounted or free flights, upgrades, and other travel-related benefits. This surge in promotions comes amid a growing desire among Israelis to travel abroad after nearly three years of regional conflicts, combined with credit card firms’ strategic push to increase overseas spending, which yields higher transaction fees.
Currently, about 800,000 Israelis hold credit cards linked to airline loyalty programs, up 40% from 550,000 a year ago, meaning roughly one in ten adults in Israel has such a card. The majority, around 70%, are issued by Fly Card, the loyalty club of El Al, now operated by Isracard after transferring from Cal. Other cards include FlyAll by Cal and SkyMAX by Max.
These cards incentivize users to spend more abroad by offering points redeemable for flights, hotels, car rentals, and other travel perks. Overseas transactions generate significantly higher fees for credit card companies, making these cards highly profitable. The shift from bank-issued cards to non-bank credit cards, which retain all fees for the issuer, is notable, with the market share moving from 80% bank cards and 20% non-bank cards to about 60%-40%.
Isracard’s acquisition of Fly Card is seen as a major growth investment, despite current marketing losses exceeding 100 million shekels, with expected annual profits of 120-160 million shekels over the next decade. Cal responded by launching FlyAll, quickly gaining over 130,000 users. Max offers SkyMAX, and recently Rami Levy, owner of Israir Airlines, introduced the SuperFly card.
Each card differs in cashback rates, point valuation, foreign currency fees, and airline partnerships, making consumer choice complex. For example, FlyAll offers 1% cashback initially, while Fly Card’s points value varies by redemption method. Foreign transaction fees range from 1% to 3%, impacting overall value. Experts caution that despite flashy marketing promising "free flights," the actual financial benefits for average consumers may be limited due to fees and redemption restrictions.
The competition reflects a broader trend where credit card companies use airline loyalty programs as a gateway to offer additional financial services, including loans. The Israeli market’s high per capita flight frequency and mandatory foreign currency transactions make these cards particularly lucrative. Industry insiders note that the "frequent flyer" club has become a dominant and highly profitable segment within Israel’s credit card landscape.
