EL AL’s unique built-in problems on the way to profitability

EL AL is in a desperate race to go back to profitability. The Israeli airline could make money – a lot of money – but it has some built-in problems that have not been solved, despite the fact that some could be solved relatively easy.

So far, EL AL failed in all its efforts to join one of the industry’s alliances. While the fact that EL AL is not flying on the Jewish Sabbath and its special security arrangements were cited as the reasons, Israeli sources said that the main reason is related to the “diplomatic arena”.

I agree that the Israeli government did very little to help.

Long after the decision should have been made, EL AL will cease its direct flights to Sao Paulo, Brazil, in November. This comes after the route did not reach profit expectations.

EL AL recently said that fuel prices were the main reason for the decision, but other airline sources said the route was not profitable from the beginning. They said the route should not have been operated in the first place, because it was obvious the long flight and the surrounding expenses will not allow a profit.

In a bizarre decision, EL AL last year began domestic flights from its home base at Ben-Gurion airport, near Tel-Aviv, to Eilat – the Red Sea resort in southern Israel. This route is in direct competition with the two smaller Israeli airlines, Arkia and Israir .

These two have the right equipment to operate such a short route. Operation of the route with the smallest type in the EL AL fleet – the 737 – was also criticized from the outset, but EL AL went ahead with the program.

Arkia and Israir, which for many years were alone on this route, claim that EL AL asked for the domestic flights rights in “retaliation”, after they managed to get rights to some international destinations in direct competition with EL AL.

EL AL denies this, claiming that the decision to start the domestic route was made based on “solid calculations” that there is a potential for profit.

Experts doubt that very much. I agree with the experts.

But the main problem, as mentioned before, is the very strange situation in which an international airline with expansion plans functions five-and-a-half days a week.

This strange situation was created many years ago by a parliamentary coalition, in which religious parties had great leverage. At that time EL AL was owned by the state, but since then it was privatized. The major shareholders, for some unexplained reason, are afraid to go back to the norm.

From time to time religious bodies threaten to boycott EL AL if it flies on the Jewish Sabbath. At the same time, these bodies do not boycott the two other Israeli airlines that fly seven days a week – nor the many foreign airlines that fly on the route to Israel.

The closure of two more routes in eastern Europe and the lay off of some seasonal employees will not change the situation of EL AL.

The Israeli airline needs to make some bold decisions that are well overdue.

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