Sources: American Airlines Dropped Israel Route to Deepen Ties With Arab Carriers

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Citing financial considerations, American Airlines said at the end of last week it would stop flying to Israel, but sources in the aviation industry told TheMarker that the real reason is the United States carrier’s ties with Arab airlines through its Oneworld alliance.

American, the world’s largest airline by passengers flown, fleet size and revenue, said on Thursday it would end its Philadelphia-Tel Aviv route as of January. The airlines’ Israeli office was given no advanced warnings and learned about the decision from the media.

“Profitability wasn’t a problem,” said an industry source, who asked not to be identified. “The past year hasn’t been easy for the airline industry in general, but that’s far from saying that the route wasn’t profitable. No one would have operated a money-losing route for so many years.”

American made the decision due to the OneWorld global alliance, whose members include Arab carriers like Qatar Airways and Royal Jordanian and the carrier of the Muslim-majority Asian country Malaysia, asserted the source.

Oneworld is the third largest global alliance in terms of passengers flown by its member carriers, behind Star Alliance and SkyTeam. American was one the founding airlines of Oneworld, which helps smooth connections between member airlines and coordinate frequent-flier benefits.

American flew about 95,000 passengers on the route so far this year, an increase of 2.7% from the same time in 2014, according to Israel Airport Authority figures.

But a spokesman for the carrier, Casey Norton, told Bloomberg News that the airline lost $20 million last year on the route and that it had never been profitable. “It is strictly a financial decision,” Norton said.

American began flying to Israel almost two years ago after it took over the route in a merger with US Airways, which had been serving Israel since 2009. After the merger, American signaled its commitment to the Israel route by sending a team of executives to Israel. In meetings with the media, they vowed to expand the route and add U.S. destinations.

Now a team of American executives is due to arrive in Israel next week to oversee the practical steps of shutting down the route. The fate of the 19 staff the carrier now employs in Israel is unclear – sales will likely be taken over by an independent agent.

The final flight to Ben-Gurion International Airport is scheduled for January 4, 2016 and the final flight to Philadelphia the following day. In a statement the airline said it would coordinate with customers who had made reservations after those dates by either arranging alternative flights or refunding their money.

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