Will Air Haifa be stillborn?

This summer a new Israeli airline, Air Haifa, is due to start flying, with a promise of attractive fares, as a “low-cost” carrier. The company refuses to give further details, but industry sources have already begun to examine the challenges it will face, among them what they say is a limited airport in Haifa, from which Air Haifa plans to operate, and the expected business model, which raises doubts as to whether the airline will be profitable, and able to offer cheap flights in the future.

Some prominent names are behind the company. Among the founders are Palo Alto Networks founder Nir Zuk; Strauss Group CEO Shai Babad; former El Al CEO Gonen Ussishkin; former El Al chief commercial officer Michael Strassburger; and former ZIM CEO Rafi Danieli.

The company chose not to comment on when it will begin operations, but “Globes” has learned that it has started recruiting employees. Minister of Transport Miri Regev recently announced that Air Haifa would begin operating this June, but it is believed that this will actually happen in July. Initially, domestic flights will be operated between Haifa and Eilat. Flights to Cyprus will begin later on.

While aviation industry experts agree that this will be a boon to people in northern Israel, they express doubts. According to them, although the new airline could reduce congestion at Tel Aviv’s Ben Gurion Airport, and provide passengers with rapid service, it will encounter difficulties.

A problematic airport

Haifa Airport is the oldest in the country, built by the British in 1934, before the State of Israel was founded. The airport, at the eastern entrance to the city, served the Royal Air Force and the jointly owned Iraqi-British oil company. When the British mandate ended, the airport was transferred to the Haifa municipality. Today, it is run by the Israel Airports Authority.

No Israeli airlines currently use Haifa Airport. Arkia CEO Oz Berlowitz explains that one of the reasons that his company ceased operating at the airport was the failure to extend the length of its runway to accommodate large aircraft. “The length of the runway at Haifa doesn’t suit the size of our aircraft. It’s a pity that the State of Israel chose to expand the Haifa seaport without considering the widening and lengthening of the runway,” he says.

The existing runway is 1,200 meters long. If it were lengthened to 1,500 meters, Berlowitz says, “Arkia would be able to operate flights from it to nearby destinations and the Greek islands, flights taking an hour and a quarter. Had they lengthened the runway to 1,900 meters, we would have been able to fly to destinations in Europe.”

Dr. Uzi Freund-Feinstein, a lecturer on transport and tourism at Kinneret Academic College, says, “The airport at Haifa is limited because, since the British left, structures have been built around it, Oil Refineries for example, that make it difficult to extend the runway in that direction, while in the other direction is the sea. When the Chinese seaport was built in Haifa, that created additional limitations for the airport.” He adds that the airport has insufficient parking or public transport access.

International airlines have used Haifa Airport in the past. “TUS Airways (a Cypriot airline, S.L.) quickly realized that it had no future there,” Freund-Feinstein says. The Israel Airports Authority says that, even before the war, the only aircraft using it were those serving the offshore gas platforms.

“Zero chance”

“The chances of an airline like this succeeding are practically zero,” says an aviation industry source. “There was room for the company when there was normal aviation in Israel. It’s hard to estimate how many flights the company will actually operate weekly, at most four is my guess, and to be economic you have to fly much more.”

Freund-Feinstein also thinks that the company won’t find things easy. “In the short term, it might succeed, but I’m dubious about the medium and long terms. There are some very serious and experienced people behind Air Haifa, but it’s unclear how this business will work. They want to set up an airline that it is claimed will be low cost, with turbo-prop planes. That means that the flights will be short-range, and will carry fewer than eighty passengers.

“Besides the fact that Haifa Airport is limited, low-cost airlines don’t use planes like these. They have to reach a high volume of activity quickly, they need a terminal that can accommodate enough passengers. Low-cost airline planes are mostly of the order of 180 seats. When we look at other low-cost companies, they need as many passengers as possible in order to be economically worthwhile. “

Turbo-prop aircraft are economical on fuel, but, as the experts explain, it’s hard to make money when there are few passengers. “An 80-passenger plane requires two pilots and two stewards. They will probably work on a minimum expense format. When they say low cost, they mean that the operation will be cheap, but not necessarily the fares,” says Freund-Feinstein. “When we think of low cost, we generally think of flights costing €10. But there are instances in which companies keep costs low, and fares high.”

Published by Globes, Israel business news – en.globes.co.il – on April 4, 2024.

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