Israeli Business Displays Fortitude as Gaza Operation Marks Second Day

Shoppers are few, but retailers stay open, airlines keep flying and the stock market rallies.

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Israeli soldiers stand next to a poster of Palestinian president Abbas during a search operation for three kidnapped Israeli teenagers, June 18, 2014.
Israeli soldiers stand next to a poster of Palestinian president Abbas during a search operation for three kidnapped Israeli teenagers, June 18, 2014.Credit: AFP

Israeli business people, investors, shoppers and tourists coped with the second day of Operation Protective Edge with a strong dose of stoicism.

Shopping malls were empty, advertisers suspended television campaigns and home sales were down to near zero, but the Tel Aviv Stock Exchange turned higher (see story on this page), few tourists cancelled flights and foreign airlines continued to operate.

Moreover, even those who were being hit hard by the fighting expressed confidence that business would recover quickly after the conflict ends.

“Experience shows that rocket attacks don’t have a long-term effect on demand for homes in the south,” said Eli Avisror, the CEO of the home builder Moshe Avisror & Sons and chairman of the Contractors Association of Be’er Sheva and South, recalling his experience during Israel’s two other big conflicts with Hamas.

“Up through 2009, the real estate market in the south was dead. But after Cast Lead, demand soared and so did prices,” Avisror told TheMarker. “People wanted to buy a new home with a protected room, but there were also investors and people upgrading to bigger houses from all over the country. After Pillar of Cloud in 2012 demand kept growing.”

At Ben-Gurion airport, Israel’s main international airport, airlines were operating their regularly scheduled flights — for the most part. Turkey’s Pegasus and Air France each cancelled one flight, the latter after one of its planes was ordered to delay a landing at Ben-Gurion. Tuesday it was readying to take off just as a rocket was reaching the Gush Dan area.

Nevertheless the French carrier said it was keeping to its schedule. Other airlines, among them Swiss, Lufthansa and Austrian, were flying into and out of Israel but not letting their crews stay overnight.

The Israel Airports Authority said there had been no changes in Ben-Gurion’s operations despite threats by Hamas to target the airport. Protective Edge began just days into Israel’s peak tourism season, with an estimated 50,000 passengers passing through on Wednesday.

The Israeli carriers El Al Airlines and Israir both offered passenger the opportunity to cancel or change flights due to the war with a fee. El Al said its offer was good until Friday while Israir said its offer applied through July 14.

El Al said some fliers were making use of the offer but there had not been many requests for cancellations or changes. Israir said the number was a few dozen. In downtowns and shopping malls in the south, shops and cafes opened for business but very few had customers. One former shopping mall manager attributed it to a general optimism that the fighting would be ending soon.

“I don’t understand why they bother opening at all. It just adds to their costs, with salaries, electricity, air conditioning, etc.,” he said. “I guess they see this is a round that will last a week or so they prefer not to change their routine or they want to show everyone that they not going to be defeated by a difficult situation.”

In the greater Tel Aviv area, shopper traffic was down more moderately, Moshe Rosenblum, CEO of the mall operator Melisron, estimated the number of shoppers in the southern city of Ashdod was down 50%, by 20% in Petah Tikva and Rehovot and by just 10% in the Ramat Aviv Mall in Tel Aviv.

Despite the plethora of online and mobile sources of information, television viewing has been up sharply since the start of the conflict, said Ifat Ben-Chai Segev, director of the Israel Rating Committee.

Some 2.57 million were in front of their television sets during the prime time hours of 9 P.M. and 11 P.M. Tuesday to watch news broadcasts, although not a few of them were presumably watching the World Cup semi-finals. By comparison, Pillar of Cloud in 2012 garnered 2.4 million viewers.

Among Israeli Arabs, the number of viewers doubled to 460,000, she said.

In spite of the high levels of viewership, however, many big advertisers had pulled and were considering pulling new advertising campaigns. The result, media buying concerns said, had been a drop of between 30% and 50% in advertising minutes in the past two days.

Among them was Strauss Group, the food maker, while Central Bottling Company, the local Coca-Cola bottler, was weighing a similar move. Bank Hapoalim briefly dropped its campaign only to decide to go ahead with it.

The cutbacks come during the peak summer advertising seasons, which executives with the broadcasters estimated was costing them some 3 million shekels daily in lost revenue.

“The money might come back partly later on, but not entirely,” said one advertising executive. Added another: “Marketing managers are always moving forward. They won’t revive a campaign that they cancelled.”

Some companies were weighing ads to identify themselves with the war effort, but at least one marketing exports advised them to refrain. “There have been cases where brands tried to ride on the empathy of the public and connect with the security situation, or to offer a promotion. It’s very cynical, and consumers see it,” said Guy Kelner, CEO of the ad agency Leo Burnett Israel.



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