Keeping Tel Aviv's Tiny Airport Open Could Cost Nearly $17 Billion

Experts warn that allowing Sde Dov to operate, as Transportation Minister Bezalel Smotrich has vowed, will lead to tens of thousands of lost housing units

FILE Photo: Planes at Tel Aviv's Sde Dov airport, June 14, 2014.
Moti Milrod

Tel Aviv’s Sde Dov airport has a single runway and two terminals that serve only domestic passengers and a few flying to nearby Cyprus, but if it isn’t closed down, as the government had planned to do by July 1, it could cost the economy no less than 60 billion shekels ($16.6 billion).

The approaching deadline to close it has been concerning for Eilat residents, who rely on it as a link to the rest of Israel and a way for tourists to easily reach the city. But flights also operate between Eilat and Ben-Gurion International Airport, and Sde Dov occupies prime real estate in the north of Tel Aviv. The government had reached an agreement with landowners near the site to shut it down.

Bezalel Smotrich, who was appointed transportation minister last week, said he would seek legislation barring the airport’s closure for at least three years. On Sunday, Herzliya Magistrate’s Court ordered Attorney General Avichai Mendelblit to explain why a delay wouldn’t be in violation of the 2007 agreement the state made with landowners.

About the cost of keeping the airport open, Smotrich said last Thursday: “The government can violate the agreement – it would be stupid to sue.” Nevertheless, landowners warned Mendelbit last week they would sue, noting that the 2007 agreement, as well as an earlier one from 1980, had been approved by the High Court of Justice.

And where does the 60 billion shekels come in? Keeping Sde Dov open would mean the continuation of height limits on construction in the north Tel Aviv, Herzliya and Ramat Hasharon in order to accommodate air traffic. It’s a wide, heavily populated area and the restrictions would affect plans that have already been approved for as many as 80,000 housing units – 16,000 of them in on the site now occupied by Sde Dov, which is slated to be repurposed for badly needed housing. In addition, some 5.5 million square meters of office and commercial construction would be affected.

Planning officials said that the continued height restrictions would result in a loss of between 21,000 and 37,000 housing units and 2.7 million square meters of office and commercial space.

The financial cost of keeping Sde Dov in operation has been estimated at 12 billion shekels, based on revenue the state would lose by not selling the airport land. On top of the 16,000 housing units, the site is also intended to accommodate 4,000 hotel rooms and several thousand square meters of shops.

But on top of the 12 billion in lost sales, the state would also be saddled with compensating private individuals who own about a third of the land the airport occupies.

The exact value of the compensation isn’t clear because the amounts hinge on the value of the land, which is among the most expensive in Israel. Experts estimate that the damages that would have to be paid out to the owners could reach as high as 5 billion shekels.

Smotrich’s proposed legislation only calls for delaying Sde Dov’s shuttering, which would reduce the surrounding land’s value by less than 5 billion. Buy many experts say that if the law passes in the Knesset, Sde Dov will remain open indefinitely and that will sharply cut into land values.

Meanwhile, owners of the surrounding land would see their building rights slashed from more than 64,000 housing units to about 43,000.

Of those, 13,000 would apply to Tel Aviv (not counting the loss of the Sde Dov land for residential building), another 5,000 in Ramat Hasharon and another 3,000 in Herzliya, All told, that would add up to 21 billion shekels of lost revenues for the government.

And that is only the costs of lost housing. Tamir Ben-Shahar, of the marketing consulting firm Czamanski & Ben Shahar, estimated that if Sde Dov continues to operate, the loss of commercial and office space would cost the economy another 25 billion shekels.

The loss of revenue would leave the treasury in a fix, since this sum was supposed to help cover the massive transfer of Israel Defense Forces bases from the center of Israel to the south. The scaled-back construction plans will also mean fewer construction-related jobs.