Economy

The launch of flights to Tel Aviv by West Asian carriers not likely to hurt Air India profitability: Experts

Ashwini Phadnis New Delhi | Updated on November 09, 2020

Will the easing of hostility between the West Asian Emirates of Abu Dhabi and Dubai and Israel, which has led to flights being launched between them, hurt Air India’s financials?

In August, an EL AL, Israeli airline, flight landed in Abu Dhabi and in October Etihad announced that it will start flying between Abu Dhabi and Tel Aviv and from November 26. flydubai will operate two-times-a-day between Dubai and Tel Aviv.

In 2018, Air India had launched historic non-stop flights between Delhi and Tel Aviv as after decades, Saudi Arabia allowed a flight bound for Israel to fly over its skies. This meant that the AI flight was 7 hours 15 minutes long, while the flight of the Israeli airline EL AL, which did not have access to Saudi Arabian airspace, was almost 2 hours 10 minutes longer than the flight flown by the Maharaja.

Analysts are of the view that these flights by some West Asian countries to Tel Aviv are unlikely to have an impact on Air India’s financials.

Nripendra Singh, Industry Principal, Aerospace, Defense & Security Practice, Frost & Sullivan, is of the view that the start of flights by Etihad and flydubai between Dubai and Tel Aviv “is unlikely to make a big difference to Air India's route profitability”.

He points out that 71 percent of the air traffic between India and Tel Aviv was through non-stop flights adding that “even the connecting flights didn't have Dubai as the primary transit location.”

Lewis Burroughs, Head of Aviation, India, ICF Consulting India Private Ltd, points out that while Air India might be the dominant player on the India-Israel route with a market share of around 60 per cent, EL AL and Arika (a charter operator) also flew between India and Israel.

“But when looking at Air India’s total network, Israel is a tiny part of it, accounting for just 0.2 per cent of total seats flown in 2019. So its probably not a major concern,” Burroughs argues.

Burroughs adds that it will be interesting to see how comfortable Israelis are flying West Asian carriers.

“Air India may need to focus a bit more on its pricing as its days of dominance on another important international route may be under threat,” Burroughs adds.

The Tourism Ministry’s website shows that during 2019, Israel was at the 14th spot among all the countries to use India’s e-tourist visa facility with about 52,000 Israelis using the facility. This accounted for 1.8 per cent of all those making use of this facility among the major countries which have been granted this concession.

 

Published on November 09, 2020

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