Eilat Fears Israeli Government May End Flight Subsidies That Helped the City's Tourism Boom

Tourism Ministry threatens to end airline subsidies due to concerns that tourists are using them to travel to Jordan or Egypt or Israelis looking for cheap flights to Europe

An airplane flies over the Eilat Airport, Israel, June 13, 2018.
Amir Cohen/Reuters

The airline subsidies that have led to the revival of tourism in Israel’s southern resort town of Eilat are under threat amid concerns they are being exploited by Israelis flying to Europe and foreign visitors who fly to Israel and then vacation in Jordan or Egypt.

The aid for this winter season is not under threat, but the Tourism Ministry told municipal officials as well as the city’s hotels that it was weighing dropping it beginning next winter. It gave the city and its tourism industry only until March 12 to come back to it with ideas.

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The ministry said it needed to make a decision on the subsidies because airlines serving Eilat needed to know what, if any, aid they would be getting next year. But sources said the government was using a compressed time frame to pressure Eilat to take steps such as lowering hotel rates and improving the tourist experience.

Amir Halevi, the Tourism Ministry director general, signaled as much in his letter warning of a possible termination of the aid, which was introduced in the aftermath of Israel’s 2014-15 tourism crisis.

“All along the Tourism Ministry has been dissatisfied with the tourism product, from the supply of places to stay and the actual tourism product in Eilat. Among other things we have worked to upgrade the seaside promenade, helped with the Timna desert attraction and encouraged development of opera to encourage the building of a higher quality product for Western European tourists,” Halevy wrote.

Ministry sources says local festivals and other events don’t meet European standards and express wonderment that Eilat hotels don’t advertise on the websites of the airlines flying to the city like their competitors in Jordan and Egypt do.

No one disputes that in terms of raw numbers, the aid has been a big boost to Eilat, which had seen its foreign arrival numbers plummet. In the 2016-17 season, just 73,500 foreign tourists landed at the city’s Uvda Airport but in 2017-18 the number nearly doubled to 146,800. This season, which still has two months left to it, arrivals have reached 135,700, a 17.5% increase from a year earlier. The number of airlines to Eilat from Europe has grown, including carriers such as Ryanair that are new to Israel.

But the subsidies are expensive: Israel pays 60 euros ($67.40) per passenger traveling through Uvda, which added up 8.27 million euros last year. Many enjoying the subsidy don’t contribute to Eilat tourism.

The Population and Immigration Authority, a division of the Interior Ministry, estimated that in 2018, 13% of those landing at Uvda crossed over the border to neighboring Jordan and Egypt with a day after their arrival. The real number is probably higher, because some tourists stay in Eilat for a day or two before moving to less expensive hotels in Jordan’s Aqaba or Egypt’s Taba, said industry sources.

Meanwhile, Israelis are taking advantage of the subsidized flights to fly to Europe from Eilat rather than from Ben-Gurion International Airport, outside Tel Aviv. In the winter of 2016-17, just 9,600 flew via Uvda, which accounted for 13.2% of all traffic through the airport. A year later, the numbers were up to 22,600, or 15.4%, and this year they have reached 30,300, or 22.4%.

Tourism officials in Eilat are convinced the subsidies benefit Israel. Even after taking into account that they are sometimes abused, they injects tens of millions of shekels into the economy above and beyond their cost.

“Eilat has changed beyond recognition, tourism has grown significantly even if not for all sector. Stopping the system would lead to a collapse,” said Shabtai Shay, general manager of the Eilat Hotel Association.

“The association believes that the grants have been a huge success. But there is a need to adjust them after three years, and that’s completely natural. The Tourism Ministry’s criticism betrays a lack of understanding,” he said.

The stakes have grown higher now that the Ramon International Airport has been completed, at a cost of 1.7 billion shekels ($470 million). The capacity of the glittering new facility just north of Eilat, dedicated in January, far exceeds that of Uvda.