El Al Entering Low-cost Commercial Flights Market

El Al subsidiary Sun D'Or, has filed a formal application to the civil aviation authorities to become a commercial airline.

El Al subsidiary Sun D'Or, has filed a formal application to the civil aviation authorities to become a commercial airline. Sun D'Or has asked for a license to operate regular commercial flights to a number of European and U.S. destinations, as part of Israel's new aviation agreements that allow additional Israeli airlines to operate commercial flights to a series of overseas destinations. The firm intends to operate low-cost flights, and to compete with similar foreign companies, rather than with its holding company, El Al. The company is seeking to operate commercial flights to Turkey (Antalya, for instance) and Italy (Verona, for instance), as well as a commercial route to Zagreb, Croatia.

Sun D'Or would also fly on Saturdays and holidays, when El Al does not operate. Saturday flights are especially important for the New York route, although the line's current fleet does not have craft with the capacity for such long-distance flights. Transatlantic flights would require the company to lease wide-body planes from El Al, a move that could generate strong opposition from that airline's Orthodox Jewish clientele.

Sun D'Or's performance improved in the first quarter this year, as it flew 58,123 customers - an increase of more than 58% over the same period in 2007. Since the beginning of the year, the firm has managed to place itself among the top 10 airlines in the number of customers it served in overseas flights out of Ben-Gurion airport, ranking sixth on the list. In this, it outperformed British Air (with 57,196 passengers in the first quarter, a decline of 2% over the same period last year) and Austrian Airlines.

El Al plans to raise the price of its tickets by an average of 6.5% on May 1.

The increase will be the company's ninth price hike since April 2007, but El Al is in good company. All the world airlines have been jacking up their prices as their outlay on jet fuel continues to rise.

In addition to the price hike, the airline also intends to increase its fuel surcharges by $15 for every leg of flights to nearby destinations, such as those in the Mediterranean area; by $20 for mid-range flight legs, such as those to European countries; and by $40 for long-distance flights to destinations in such regions as the Far East, the U.S. and South Africa.

Ticket prices for a small portion of its destinations will remain unchanged, and for certain destinations like Russia and Hungary, El Al will be offering discount prices, as it has in the past. The price hikes will not affect tickets issued before May 1.

"With the price of oil at about $117 to the barrel, this means that the fuel component of ticket prices for long-distance destinations has increased to about 69%, compared by 40% two years ago," said El Al's vice president for commercial and aviation ties, Rami Levy.