Israeli flag carrier caught in cargo slump

  • November 26, 2013

Despite EL AL Israel Airlines reporting growth in revenue and profit during the third quarter of 2013, the Israeli flag carrier’s airfreight is down.

Cargo revenues dropped by about 0.8 percent year over year. During the third quarter, EL AL had nearly 36 percent of the cargo market share at Ben Gurion International Airport in Tel Aviv, its hub. That’s up almost two percentage points from the third quarter of 2012.

Shali Zahavi, EL AL’s vice president of cargo, tells Air Cargo World that the airline’s airfreight in Israel has decreased during the first 10 months of the year by 3.6 percent. He attributes the decrease in exports mainly to Europe and the move of airfreight to seafreight.

“At the moment, due to the world’s economic situation, we can say that the situation is stable,” he says. “We cannot see growth in any country for 2013.”

EL AL operates a fleet of 37 airplanes and serves more than 40 destinations worldwide. Though the airline has had freight service since 1950, it opened a separate cargo division in 1997.

EL AL’s major freight destinations are Europe, the U.S. and mainly for imports, the Far East, Zahavi says. The fastest-growing commodity the airline flies is pharmaceuticals, followed by technology and perishables.

Zahavi says the Israeli air cargo industry has been decreasing the past seven years, dropping from 340,500 tonnes in 2007 to 281,500 tonnes in 2012. That’s a 17-percent decrease over five years.

“There was a huge decrease in agriculture products, which were shifted to the sea or were decreased due to tough competition,” Zahavi says.

Speaking of competition, IAG Cargo announced in September that it is increasing capacity between Tel Aviv and London in summer 2014 by introducing a daily Boeing 777-200 to the route, replacing one of the existing Airbus A321 aircraft.

“The Middle East and Africa is a key market for IAG Cargo, especially when it comes to the movement of perishables such as fresh fruit and vegetables,” Tony Snell, regional commercial manager for the Middle East and Africa at IAG Cargo, says.

While IAG Cargo is adding capacity between London and Israel, EL AL is introducing short-haul operations to five European destinations starting March 2014. The routes will use Boeing 737-800s and be implemented by summer 2014.

While announcing EL AL’s third-quarter results – the airline’s net profits were up 54 percent year over year – EL AL Chief Executive Elyezer Shkedy says the airline faced increased competition.

“The main change was due to the dramatic increase in the activity of Turkish airlines to and from Israel, which amounts to an incomprehensible support of the Israeli government in the international expansion of Turkish carriers at the expense of Israeli airlines, which are prevented from flying to Turkey,” Shkedy says.

Turkish airlines are entitled to 126 weekly flight legs, compared to zero segments by all Israeli airlines, he says.

In addition to increased competition, Zahavi says EL AL’s cargo arm is suffering due to other factors.

“The textile industry was down dramatically since most of the production lines to textile were moved to other countries,” he says. “Add to it the global electronic slowdown in the last few years, and it ends up with sharp decrease.”

Despite all this, EL AL as a whole is still growing. In late October, Boeing and EL AL finalized an order for two additional Next-Generation 737-900ER airplanes. The order came just two weeks after the carrier took delivery of its first 737-900ER.

EL AL is also expanding its network and began offering new routes to Venice and Larnaca, Cyprus.

  Like This Post
Current Issue Magazine Cover
Sign Up Email List