El Al Raising Prices by Up to 9%

The airline, which is controlled by the Borovich group company Knafaim, blames the need on the rise in jet fuel costs.

For the eighth time within a year, El Al Airlines is raising ticket prices, this time by 8% to 9%. The increase will come into force after the Passover holiday. Again the airline, which is controlled by the Borovich group company Knafaim, blames the need on the rise in jet fuel costs.

Ticket prices are naturally higher in peak seasons, which Passover certainly is. El Al, run by CEO Haim Romano, also raised the "fuel tax" it adds to ticket prices from March 24. It raised it by $12 to Europe and $22 to more distant destinations in the U.S. and Far East. The increase applies to single segments - the flight in one direction. You pay the same again when flying the other way.

The previous price increase had been on February 26, when the carrier raised ticket prices by 3.5%, saying its outlay on inputs had risen because of the weakening dollar.

Rami Levi, the company's Commerce and Aviation Links vice president, explains that after the February price hike, the cost of fuel rose by about 9%, which El Al had to factor into its ticket prices. But he argues that Israeli consumers shouldn't notice the difference because of favorable exchange rates, for them.

"From the perspective of the Israeli consumer, the realistic price of a flight ticket in shekels is roughly what it was a year ago because of the erosion of the dollar against the shekel," he said.

When raising prices, El Al typically offers packages at bargain prices. In February, for example, it offered discount packages to Vienna, Moscow, Barcelona, Athens and Prague, in order to encourage traffic on these lines.

El Al said that with oil having risen to $109 per barrel, it is weighing its moves. Indeed, the news wires reported that U.S. crude oil futures pulled back yesterday, but trading was choppy and the dip was only seen as a slight retreat.

Naturally, El Al is far from alone. Airlines around the world have been jacking up ticket prices to cope with the surge in costs resulting from crude oil's mad leap skywards in the last year. Some have adopted alternative mechanisms to squeeze more money from passengers, such as extra pay for the privilege of taking luggage.

Fuel now accounts for 30% to 35% of an airline's costs, nearly three times the historical average, says the MarketWatch Web site. No wonder they're ditching the peanuts and free soda.