El Al aims to stop its scheduled air service between Ben-Gurion International Airport and Cairo due to low demand, and has advised the Foreign Ministry of its intentions.

"It is an expensive flight route on which almost no one is flying," a senior El Al executive told TheMarker just before the Rosh Hashanah holiday. "The company cannot continue to maintain the route and is seeking to stop flying to Cairo because it doesn't pay," the executive said.

Industry sources said if it had not been for the provision in the 1979 Egyptian-Israeli peace treaty that specifically provides for the service, El Al would have already discontinued flying the route, due to minimal ticket sales and the high cost of security.

Currently El Al operates just one roundtrip flight a month to the Egyptian capital, having cut back its flight schedule in April of last year from daily service to one roundtrip a week to Cairo due to a lack of demand.

In January of last year, anti-government unrest in Egypt broke out leading to the ouster of President Hosni Mubarak and the eventual election of the current government led by the Muslim Brotherhood, which is much colder to Israel. Among the dramatic events of the revolution was the storming of the Israeli embassy in the Egyptian capital.

In addition to affecting the number of foreign tourists visiting Egypt, last year's turbulence also affected business ties between the countries, notably the cut-off of the sale of natural gas to Israel. Passenger traffic between Israel and Egypt declined by 60% last year compared to 2010, according to the Israel Airports Authority, to 21,500 passengers. In February 2011, after the outbreak of the Egyptian revolution, only 879 passengers flew between Israel and Egypt, an 80% decline from February of 2010.

The sparse demand for seats on the route continued into this year, with just 11,400 people flying between Israel and Egypt between January and August 2012, a 25% drop from the already dry period the year before.

Even before cutting back on flights, El Al had begun scaling back its Egyptian operations in another way. When the last El Al security officer left his post in Egypt to return with his family to Israel just before the revolution erupted, efforts to replace him were halted after the upheaval and he was never replaced, partly to save on expenses.

Demand for other flights is brisk

When it comes to flights to other destinations, however, Israeli demand for El Al flights is brisk, the airline's marketing director, Einat Yanai, told TheMarker. "Despite the economic recession, the market is growing and Israelis are flying abroad a lot more," she said, adding that the fall holiday travel season, from Rosh Hashanah through Sukkot, looks "excellent."

El Al, she said, expects to fly 5% to 6% more Israelis abroad this holiday season than during last year's. "We've increased capacity during the days that we operate over the holiday season this year," said Yanai. She has no explanation for the increase in foreign travel by Israelis, other than to suggest that it might be a way for people to boost their spirits amid these times of economic foreboding.

Despite the rise in the cost of fuel over the past year, Yanai said holiday season flights abroad are not necessarily more expensive. Competition for customers has gotten fiercer, she said, and Israelis continue to flock to classic destinations, with the most popular in Europe being Paris, London, Barcelona, Rome and Amsterdam, while in the United States it's still New York and Los Angeles, and the Far East it's Bangkok.

Domestic tourism is sturdy

On the tourism homefront, Israeli hotels reported high occupancy levels for Rosh Hashanah, with some establishments reaching full occupancy even though the Jewish holidays fall relatively early this year, not long after the summer holiday season.

The Crowne Plaza chain reported 100% occupancy at seven of its eight domestic hotels, including the Holiday Inn in Ashkelon. It was only the Crowne Plaza at Tel Aviv's Azrieli Center that was not full, but the location caters primarily to business travelers, whose numbers go down over the holiday season.

The Dan hotel chain reported a record occupancy of nearly 100% at all its 14 hotel properties. The Fattal chain, which has 30 hotels around the country, reported that it had not a single room available over the Rosh Hashanah at its hotels in Jerusalem or the Dead Sea. In Eilat and in the north, the chain noted, occupancy approached 100%, although there were still some rooms left for Sukkot.

Gali Raz, who heads the Western Galilee tourism association, reported occupancy rates of about 90% at bed and breakfast accommodations in his region.