El Al to hold back seats for tech businesspeople

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As Tech-Air struggles to launch Israel-US flights, El Al will keep back seats on flights to New York, London and Paris for businesspeople.

In the coming weeks, El Al Israel Airlines Ltd. (TASE:ELAL) plans to hold back 15 seats on every flight to London (Heathrow), Paris and New York for tech professionals flying for business. Over the coming week travel agents will be informed about the new plan designed to provide a solution for businesspeople and senior tech executives needing to fly to these destinations. The plan is being implemented after the Ministries of Transport and Economy and Industry contacted the airline of the need to adapt its services for tech businesspeople.

As part of the plan, El Al will keep back seats on each flight in economy class, which will be available for purchase up to 9 days before departure. If the seats are not sold to tech businesspeople within this time window, they will be opened for sale to the general public. The airline also promises that there will be no overbooking because of the need to keep seats for tech people. On the one hand, industry sources believe that this will make it difficult for El Al to manage the flights and force it to monitor each flight, and on the other hand, they say that the move is highly feasibility. Under the plan, the flights can be booked by tech companies that are members of El Al's business division.

Lack of flights between Israel and US

For more than a year, US airlines have not flown regularly to Israel, and El Al remains the only company flying directly between Israel and North America. US airlines have operated erratically since the war broke out, freezing their operations and then resuming flights, but since the escalation in the north in August, they froze their operations again. Delta has extended its cancelations until March 2025, while American Airlines and United Airlines have yet to announce a date for the resumption of Israel flights.

The shortage of seats on flights to the US is the most acute. Although tourists are not coming to Israel, the need to fly to North America still exists for a variety of purposes. The second largest Jewish community in the world (after Israel) lives there, the tech sector and other industries have extensive business ties there, and they need access North American destinations. The tech industry also depends on the US as a source of income: two-thirds of the capital it raised in the last quarter came from outside Israel, mainly from the US.

In the third quarter of 2024, El Al's market share in flights to North America was over 86%, compared with 35.1% the corresponding quarter of 2023. Over the past year, the Israeli airline has admitted that it has difficulty meeting demand for many destinations, including the US. According to market estimates, in order to satisfy the huge demand for North America alone, about 16 flights per week must be added.

Despite the Ministry of Transport's attempts to bring back the US airlines, El Al is expected to remain the only airline flying directly to the US, at least in the short term. Accordingly, El Al's fares will continue to be set according to the method by which when demand is high, the number of seats decreases, and prices climb.

The pricing of airline tickets is not expected to change with the introduction of the reserved seats for tech companies. The maximum prices that El Al set for the war period for economy class flights will remain. The maximum return fares set for the plan's destinations are $1,515 to New York, $767 to London and $699 to Paris until the end of February.

El Al stresses that this is a three-month plan depending on the situation, and the operation of the plan will be reviewed throughout the period. "El Al is making efforts to assist the Israeli economy and high-tech companies and will continue to do as much as it can," the company said.

Tech protest movement wanted to lease planes

In recent months, tech executives have been forced to settle for more expensive flights with stopovers. All of this led the DemocraTech protest movement to set up an initiative called "Tech Air" to operate flights between Israel and the US from January using aircraft leased from a European company that would be operated under the code of an Israeli company. The aim was to open the route to the general public, with three direct weekly flights that would be marketed by travel agents, starting January 5, at a flat return price of $1,350 for economy class, $2,600 for premium class, and $5,400 for business class, through a wet lease of a Boeing 777 aircraft. The flat-rate pricing model does provide certainty for last-minute ticket bookings, but it is not necessarily a real bargain compared with El Al's prices when booking a ticket well in advance.

When the details of the flights were published, DemocraTech noted that the schedule was not final, and that the company would only be launched when it knew that at least 35% of tech companies had committed to participating and purchasing tickets for the period of activity. Meanwhile DemocraTech has been working to promote leasing the aircraft, and according to industry sources, contacts were made with Portuguese airline euroAtlantic Airways to lease Boeing 777 aircraft. euroAtlantic chief commercial officer Raul Largo told "ch-aviation" that his airline had received a request from multiple brokers to operate Tel Aviv - New York JFK flights but added that euroAtlantic was not in direct contact with the end customer and he did not know if it was DemocraTech.

Travel agents "Globes" spoke to report that there are currently no indications in Tech-Air will actually take off as planned. Flight planning is a process that takes place months in advance, in order to coordinate airports, landing rights, aircraft use, and marketing tickets. Adding a flight less than a month before departure date is very rare from an operational and marketing perspective.

Published by Globes, Israel business news - en.globes.co.il - on December 15, 2024

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