How the Open Skies Reform Taught Israelis to Love Flying

In a decade of booming tourism, EU aviation pact was the pivotal event in cutting airfares, boosting competition

Rina Rozenberg Kandel
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Tourists at the Western Wall in Jerusalem.
Tourists at the Western Wall in Jerusalem. Credit: Emil Salman
Rina Rozenberg Kandel

The decade about to end could well be called the decade of Israeli tourism. On both sides of the travel balance, figures for tourists coming to Israel and Israelis traveling abroad have soared to record levels.

The pivotal date for this phenomenon is April 2013: That was when the first stage of the with the European Union went into effect. It brought new airlines flying in and out of Ben-Gurion International Airport, most importantly low-cost carriers. Airfares fell in the tens of percent and scores of new destinations were added to schedules.

There were other revolutions in the tourism business, among them Airbnb. Below TheMarker looks at five of the biggest changes to the Israeli tourism sector since 2009.

Travel happy

Shortly after then-Transportation Minister Yisrael Katz signed the agreement, Israeli travelers who once would have shelled out $500 for a ticket to Europe soon found they could book the same flight for less than $300, if they reserved a month in advance. They could even find one-way tickets prices in the tens of euros (albeit without luggage and other costs). Once obscure destinations, like Poznan in Poland and Kaunas in Lithuania, became go-to places.

The result was a more than doubling of the number of Israelis traveling abroad every year – from 4 million departures in 2009 and to 8.5 million in 2018. This year will break the record again, with 8.5 million departures in the first 11 months, a 7.7% increase over 2018.

The number of carriers serving Israel route is 50% larger than it was before Open Skies. Some 140 airlines fly in and out of Ben-Gurion to 200 global destinations. Israel’s main international airport is due to join the elite club of world airports with traffic of 25 million passengers a year. Terminals 1 and 3 are both due for expansions at a cost of billions of shekels.

The new carriers to fly through Israel include Cathay Pacific, Virgin Atlantic and Hainan Airlines, but perhaps the most important addition to Ben-Gurion’s business is the low-cost airlines that arrived, too, mainly as a result of Open Skies.

EasyJet was the first of them, starting flights at the end of the last decade, but its schedule was paltry and Israelis had a steep learning curve as they discovered stiff limits on weight and dimensions of luggage, and that foods and drinks on board weren’t free.

But it happened, and today EasyJet it is among the five top airlines at Ben-Gurion. Wizz Air is the biggest foreign carrier serving Ben-Gurion and Ryanair in No. 8.

Low-cost airlines have become such a big part of the Israeli travel scene that Ben-Gurion decided to renovate Terminal 1 (the old main terminal) as the designated terminal for low-cost flights. The airlines pay lower fees than they do for the main Terminal 3. So far this year, Terminal 1 has been responsible for some 2.4 million departures, 18% of Ben-Gurion’s international total.

Rice for breakfast

For many years, the Israeli tourism industry contended with a glass ceiling of 3 million tourist arrivals annually. No tourism minister or director general succeeded in finding a way to break through it. Thus in 2009, just 2.3 million arrivals were recorded and the next year 2.8 million. On the whole, growth averaged just a few percentage point a year and hardly reflected the potential of a country with a unique combination of religious sites, history, and sea and sun.

The year 2014 was a crisis year. Israel and were at war and some airlines briefly halted flights to Israel. But a year and a half later, the recovery began and the 3 million ceiling was finally broken in 2017 – by a wide margin of 600,000.

The relative quiet of the last few years has helped as had steps taken by the Tourism Ministry under Yariv Levin, including cash grants to airlines opening new routes to Israel, targeting markets that had been ignored before and cooperating with big travel sites like Trip Advisor and Expedia.

The result: This year Israel is on target to host 4.5 million tourists, a 90% increase over a decade ago.

The kind of tourists coming to Israel has also changed, as is evidenced in the streets of Jerusalem and Tel Aviv. The top six markets for foreign tourists hasn’t changed over the years (the United States, France, Russia, Germany, Britain and Italy). However, the number of visitors from China has soared – from just 10,000 in 2009 to 145,000 by the end of November. China is now the No. 8 source of incoming tourism for Israel.

In response, Israeli hotels have learned that breakfast options are no longer limited to omelets and Israeli salads but have to include rice as well. But not just Chinese tourism has grown – the number of visitors from Poland and Romania has increased three- and four-fold, respectively.

What, me worry?

Travel warnings against visiting ’s Sinai issued by Israel’s National Security Council are now at the highest level, meaning there are concrete security concerns that should deter visitors. They haven’t.

According to figures from the Central Bureau of Statistics, Sinai wasn’t a particularly popular destination from Israelis before 2018. Until then no more than 220,000 crossed the Taba terminal into Egypt. But last year the number suddenly surged, and in the first 11 months of 2019 reached 498,000. In 2009 it was just 212,000.

Travel alerts or not, Egypt’s relative security quiet and especially low prices at Sinai’s five-star hotels seem to be an irresistible lure. Especially during the Jewish holidays, Sinai resorts are swelled with Israeli tourists seeking quick and cheap vacations.

Warnings about travel to Turkey are also being blithely ignored. At the start of the decade Turkish leader Recep Tayyip Erdogan’s verbal attacks on Israel after the Mavi Marmara incident caused Israelis to boycott what had until then become a popular destination.

But over the decade, it seems Israelis learned to forget. Since 2013, there’s been a gradual increase in travel to Turkey. The increase has been mainly among Israeli Arabs, but a lot of Jewish Israelis haven’t been able to resist all-inclusive packages to the popular Turkish seaside resort of Antalya.

Last year, 443,000 Israelis flew to and this year the number is expected to reach 500,000, coming close to the 2008 record.

Airbnb changes the rules

In the previous decade, the options for Israelis and others traveling overseas was a hotel or, if you could swing it, staying with friends or family. The gig economy has changed all that. Airbnb has become the code word for short-term rentals in a private home, but there are lots of others, such as booking.com and HomeAway.

The advantages are self-evident: Tourists enjoy a very wide range of places to stay all over the world and prices are lower than at conventional hotels, opening up the possibility for traveling to places that would have once been regarded as prohibitive. But it has also come at a cost, Many homeowners have turned the Airbnb or other properties into businesses, but don’t pay taxes on their income like a business. Many cities have tried to crack down on it, including Tel Aviv, which tried to levy a higher municipal tax on homes rented out more than 90 days a year.

Neighbors complain about noise and traffic from tourists. In some cities, the phenomenon of short-term rentals has reduced the supply of rental homes for people to live in as landlords look for bigger profits from renting to vacationers.

For people visiting Israel, short-term rentals have become an important alternative to the country’s expensive hotels. A study conducted earlier this year found that Tel Aviv alone had one listing on Airbnb for every 25 residents, compared with one in 78 for Barcelona and one for every 45 in Amsterdam.

Home bodies

Despite Open Skies and Airbnb, Israelis still book reservations at local hotels. In 2009, overnight stays by Israelis numbered 11.8 million, a figure that continued growing until 2016 when it plateaued at 13.6 million.

Still, the hotel business remains attractive. The number of rooms in the country has risen from 48,000 in 2009 to 65,000 this year, and most of that growth has occurred in recent years, Thousands of other rooms are in development. Occupancy rates have risen as well – from an average of 60% in 2009 to 66% in 2010-13. They fell in 2014 due to Operation Cast Lead but began recovering in 2017 as foreign tourists returned. This year they are expected to reach 69-70%.

Nevertheless, the Tourism Ministry has not been able to solve the problem of high hotel rates. The number of hotel rooms has grown, but the number of tourist arrivals has grown even faster, so hotels have no reason to lower rates.

The ministry sought to encourage the development of popularly price hotels via investment subsidies, but the local hotel industry still prefers to focus on expensive properties. Israel remains one of the most expensive places to visit in the world.

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