Airlines compete on price in Israel market

Swiss is offering a roundtrip fare to New York, via Zurich, of $666.

"The Israeli consumer is one of the most sensitive to prices in the world. It is a stronger factor than for American or European consumers. An Israeli sees a good deal and doesn’t want to miss it, even if he doesn’t really plan to fly abroad by the weekend," the marketing manager of a leading travel agency told "Globes".

"For this reason, the marketing of these flights is basically over a price that cannot be passed up, sort of like selling ice to Eskimos while making them feel really good about the price they paid for it. The result is a major reduction in fares to 20-40% of the regular fare, which is definitely a big deal, especially in the current competitive climate."

Arkia Airlines Ltd. is the airline that is pushing the fares down the most, through its low-cost Arkia Express service, which offers $99 one-way fares to European destinations.

Arkia launched Arkia Express to Paris and Amsterdam three months ago. It recently increased flights to these destinations, and expanded the service Moscow, Kiev, and Rome. It currently operates three weekly low-cost flight to Paris and Amsterdam and 2-3 flight to the other destinations, depending on demand.

The $99 one-way fare does not include luggage, food, or beverages. Food and beverages have to be purchased either in advance, or during check-in or on board, at a higher cost.

Response to Arkia's low-cost fares was heavy. Within ten days of the launch of the expanded service, 10,000 seats were sold, almost half of them to the new destinations. Arkia CEO Gad Tepper said that the airline plans to add more destinations and increase flights to current destinations.

Foreign airlines are also now offering discounts to Israeli passengers. European airlines, battered by a reduction in passenger traffic, have discovered the potential of Israelis seeking to reach the US via Europe. European carriers are offering especially attractive fares to follow-on destinations in the US that are not served by direct flights from Tel Aviv (New York, Newark, Los Angeles and Atlanta), such as Boston, Chicago, and San Francisco. Flights to such destinations by European carriers are likely to be much cheaper than by US carriers or El Al Israel Airlines Ltd. (TASE: ELAL), especially during the winter season.

Swiss is offering a roundtrip fare to New York, via Zurich, of $666. The fares, marketed by Gulliver Travel Agency, are for specific dates, and the number of seats is very limited. The agency is offering a deal for $888, including five nights at a five-star hotel, for flights between January 26 and January 31.

Diesenhaus Travel Agency is offering a $690 fare to New York via Kiev by a Ukranian airline. The campaign is valid through March.

Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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