Air Traffic Plunges as Crisis Takes Toll

The global recession has reduced the airline industry to startlingly sorry figures this year. Passenger traffic at Ben-Gurion International Airport contracted by 13% during the first five months of 2009 compared with the parallel period of the year before, according to figures provided by the Airporys Authority.

Airline traffic has dropped 6% since the beginning of 2009 versus the same period in 2008, the Authority says.

Only 3.7 million travelers have passed through Ben-Gurion since the beginning of the year, compared with 4.3 million between January and June 2008.

A total of 31,400 flights landed at the airport in the same period, down from 33,400 in the parallel period last year.

The first week of June saw passenger traffic plummet 19%, and international plane traffic sank by 10%, according to Authority figures.

El Al CEO Haim Romano said air traffic has been thinning since the beginning of the year.

"There is a combination of fewer reservations - partly due to cancelations by tour groups, which are still being affected by the war in Gaza, as well as the global recession and the substantial slowdown of overseas businesses," Romano said.

El Al saw less of a slowdown than the industry on average in recent months, Romano said.

"We do hope to see an increase in traffic over the summer, particularly incoming traffic, which has been hit harder," he said. He called on the Tourism Ministry and Israeli hoteliers to make a concerted effort to increase tourism rates in the second half of the year.

Chief executive of British Airways in Israel, Yael Katan, agrees there are several factors causing the drops in incoming and outgoing travel. First is the global economic slowdown and the local recession. And secondly, Israel is considered a relatively expensive destination for foreign tourists.

"In times of recession, even if potential customers do choose to take a vacation, they will prefer cheaper destinations," she said.

And thirdly, there's the business aspect.

"Here it's mainly due the economic slowdown. Many people have lost their jobs. Companies are cutting back on their business trips, meaning less overseas travel. There is a palpable change in overseas travel policy. People who customarily flew business class have moved to coach, and are flying only when absolutely necessary. Moreover, if once five people might have flown to an overseas meeting, now only one will go, if any. In this respect, Israel is no different than any other country in the western world."

Katan is not optimistic about the coming summer season.

"This summer will most certainly be slower than the last summer travel season. So long as we don't emerge from the economic recession and see a recovery, we won't be seeing a dramatic increase in the number of air travelers - And this goes for the business travel market as well," she said.

Katan doesn't expect things to improve before the end of the year. Fuel prices are soaring again, she points out, and prices cannot remain at their present levels. And price increases spell even fewer passengers.

"The only thing propping up the number of air travelers today is very low prices. Profits are low, and they can't stay that way for long," Katan said.

Swissair CEO in Israel Avner Gordon is worried too.

"Prices will be lower over the summer, customers will enjoy cut-rate sales campaigns that will be aimed at filling seats. But that means less revenues for airlines," he said. "Airline revenues will sink 20% to 30% versus last year. It's going to hurt. I'd go so far as to say that we have never seen such deterioration."