Arie Egozi/TEL AVIV

Domestic Israeli airline hopes to break into the charter business with a "flexible approach" to luring customers

Israir, a small Israeli domestic airline, is preparing to go international. After years of operating domestic flights, mainly on the Tel-Aviv-Eilat holiday route, Israir is bracing for its jump into the bigger pond of international charter flights to European destinations.

The airline is making its move into the international market at a difficult time. Last year, Israir appeared poised to begin a new co-operative relationship with Israeli flag carrier El Al Israel Airlines until a sudden break in talks between the two airlines.

This resulted in a continuation of El Al's long-standing relationship with Arkia Israeli Airlines, Israel's largest private airline. Israir again found itself standing alone.






Meeting the competition

Doron Dovrat, Israir's chief executive officer, says that he is aware of the uphill struggle that the airline faces as it takes aim at seizing more of Israel's international business, but he claims that he is not worried.

"We are aware of the risks we are taking but at the same time are very confident that our product will have the right appeal in this saturated market," Dovrat says.

Domestically, Israir faces competition from two local charter airlines, Arkia and El Al subsidiary Sun d'Or. But foreign charter airlines also have maintained an impressive presence in the Israeli market.

In 1998 alone, the number of charter flights originating in Israel increased by 21% from 1997, and of that year's overall charter traffic in Israel, 80% involved non-Israeli airlines.

"Our main goal is to gain back some of the traffic that fell like ripe fruit into the hands of the foreign charter carriers," says Israel Harel, president of Israir.

With ticket prices now so low throughout the Israeli market, Israir is banking on what Dovrat calls "cabin atmosphere", such as attractive decor and enhanced passenger services to lure passengers onto its two 737-700s. Israir also hopes to encourage travel agents to send business its way with "a flexible approach-and not only in higher commissions," says Israir's chief executive officer.

Israir now operates five 46-seat ATR42 turboprops for its domestic flights. To enter the international charter market, the airline has leased two brand new 737-700s from Irish leasing company Pembroke Group. The first will be delivered in March and the second in May. Pilots are already training in Seattle, Washington, USA, where the two aircraft are being readied for the flight to Israel.

An Israir pilot shortage created by the short lead time between leasing the two 737s, training pilots and starting the international flights has led to an agreement between the Israeli airline and Balkan Bulgarian Airlines. The Sofia-based airline will supply Israir with five experienced captains that will fly the European routes with Israeli pilots until Israir's pilots complete their 737 training.

To further enhance crew quality, Israir has hired five ex-El Al captains to join the flight crews as observers. "This will ensure the highest level of professionalism," says Dovrat.

Banking on back-ups

Backing up the two 737-700s will be a fleet of MD82s and Airbus A320s operated by Onur Air, a Turkish charter airline. "According to our agreement, they will provide a substitute aircraft within two and a half hours from a request," says Israir's president.

Israir's two 737-700s will be maintained by El Al, which has itself ordered five 737-700/800s. The two Israir 737-700s will have 148 seats in a one-class configuration and will go into service without an audiovisual in-flight entertainment system, although one system may be installed later.

Israir is owned by two investor groups, with Ganden Investments holding 70% of the shares. Holding the remaining 30% is a group of private investors headed by Zeev Horn and Moshe Leibovitz. Sources say the main shareholder group, which has interests in a variety of Israeli wholesale travel operations, invested about $10 million in Israir's transition to an international airline. "Our ambitions are sky high and are in the direction of scheduled flights and cargo flights," Israir's Dovrat explains.

Blue skies ahead

Domestically, Israir officials are encouraged by the airline's performance since it began flying the busy Tel Aviv-Eilat route in August 1996. It currently carries approximately 30% of the traffic to and from the Red Sea resort. Overall, the airline flew approximately 300,000 passengers in its domestic routes during 1998. Company officials expect an increase of 20% this year.

Contributing other business to Israir's books are flights to Jordan by the airline's five ATR-42s under subcontract to El Al.

"The potential in the domestic market and in flights to near destinations has not been fully exploited and therefore we plan to enlarge our fleet of small aircraft. We are looking at additional ATR-42s and also at the bigger (70-seat) version, the ATR-72," says Harel.

Source: Flight International