As war spooks foreign airlines, Israelis look to local start-up

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(Bloomberg) — It is named after a city thatâ€s off-limits to civilian aviation due to incoming rockets and drones. Its fleet is just two propeller planes. And you wonâ€t find it on Google Flights.

But Air Haifa, among the few Israeli startups emerging during a year-old regional war thatâ€s far from won, still has high hopes.

A cascade of foreign carriers has shunned Ben Gurion Airport, Israelâ€s main international gateway, meaning many in the country must turn to a handful of local alternatives to make the first leg of an overseas journey. Tickets are scarce and prices have skyrocketed.

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Thatâ€s created a niche for two-month-old Air Haifa. Unlike counterparts El Al, Israir or Arkia, it offers just one destination – Larnaca, in Cyprus – albeit six times each day. Flights to Athens are in the works.

For all their tourist allure, both cities have become de-facto hubs for travellers to and from Israel. Thousands who were stranded overseas by flight cancellations over the summer were instructed by Israelâ€s transport ministry to make their way to Larnaca or Athens, and from there to be ferried to Tel Aviv aboard short-hop planes.

That layover is now a semi-formal fixture, which meant that Air Haifa could count on a bonus clientele – connections passengers – when it launched the Larnaca route on Oct. 14.

“We are seeing a lot of customers who come, even from the United States, through Europe on a connecting flight, and head to Cyprus for our flights, and vice-versa,†said Michael Strassburger, Air Haifa co-founder and executive vice president.

That wasnâ€t how Air Haifa was conceived a year and half ago, before the Hamas attack from the Gaza Strip which triggered the war. The company had planned to base its operations in Haifa and serve some 3 million people – around a third of Israelâ€s population – for whom the northern port cityâ€s small airport would be closer than Ben Gurion, which is outside Tel Aviv.

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But the spread of fighting to southern Lebanon, 40 km (25 miles) from Haifa, meant the airline had to relocate operations to Ben Gurion and defer its planned services to Athens as well as to Eilat, Israelâ€s southern Red Sea port.

“Anyone sensible might ask: ‘Should an airline be launched in the middle of a war?†And the sensible answer would seem to be: ‘Absolutely not.†But on the other hand, any sensible Israeli knows that this is a golden age for Israeli airlines,†Strassburger said.

The more than 100 carriers that fly to Israel in peacetime have been winnowed down to fewer than a dozen, he said, giving Israeli airlines a 78 per cent share of the local market in October: “That has been unrivalled in 50 years, if not from the inception of the country.â€

The Larnaca flights aboard the two new ATR 72-600 aircraft, each of which has about 80 seats, are being offered at introductory rates of $39 one-way and $98 return for passengers with hand luggage only, significantly below competitors†prices.

The war made it tricky to find financing for the twin-engine turboprops, Strassburger said. But Air Haifa plans to double the fleet to four planes by next summer, and is eyeing other potential Mediterranean destinations within the aircrafts†1,000 to 1,200km range.

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Much of that expansion hinges on Air Haifa being able to fly from Haifa – which Strassburger hopes might happen as soon as next month, given talk of a cease-fire with Hezbollah in Lebanon.

The company would look to commercial dominance of the smaller airport and lean on word-of-mouth recommendations to boost sales. Strassburger sees little point in linking the carrier up to online ticketing services, which, he said, would add surcharges that would sap its low-cost appeal.

“Simplicity is very important to us,†he said.

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