The Israel aviation industry got off on the wrong foot when it was first founded. Israel Aerospace Industries (IAI) would complement their smart weapons systems with executive jets for Americans. They’ve been making these jets since the 1970s, handing the bare planes to Gulfstream for personalization.
These executive jets are still responsible for 8% of the revenues earned by Israel Aerospace Industries. They’re also not a profitable product for the industry. The average sale of a bare plane to Gulfstream results in the loss of 1 million shekels, or the equivalence of almost $300,000 per aircraft.
Other companies within the Israel aviation industry look for ways to find profitability. 73% of IAI’s sales come through military contracts. There is $11.5 billion worth of orders on backlog. Even with all of these potential successes in place, the aviation division continues to lose money.
What can one of the largest companies in Israel, along with one of its largest industries, do to support the local economy and become more profitable?
Important Israel Aviation Industry Statistics
#1. Over 17 million travelers made through way through Ben Gurion in 2016, using over 110,000 incoming or outgoing international flights. Another 600,000 passengers flew on domestic flights in Israel during the year. The industry topped 20 million international passengers for the first time in 2017 (The Jerusalem Post)
#2. Ben Gurion serves more than 100 carriers, flying to over 135 destinations around the world. Traffic increase through the airport was 11% higher than the year before in 2016. (The Jerusalem Post)
#3. Although passenger traffic levels are increasing in Israel, it is because more Israelis are traveling. Only 30% of the passengers who make their way through Ben Gurion are international visitors. (The Jerusalem Post)
#4. Turkey is responsible for the most arrivals to Israel with almost 10% of the total incoming and outgoing traffic. That occurs because cheaper connections to a final destination are available from the country. (The Jerusalem Post)
#5. The United States sends 1.45 million travelers to Israel each year, while 1.2 million came or went from Germany. France and Russia provide 1 million visitors each year through the Israel aviation industry. (The Jerusalem Post)
#6. El Al is the airline providing most of the passenger movements for the Israel aviation industry, supplying 5.5 million passengers each year. Turkish Airlines brings 932,000 travelers to the country, while budget-friendly EasyJet provides 719,000 passengers. (The Jerusalem Post)
#7. 90% of the low-cost travelers use an automated check-in online as part of their traveling process. That’s compared to the 36% of travelers through Ben Gurion using that process altogether. 9% of passengers use an online check-in after arriving at the airport. (The Jerusalem Post)
#8. IAI is one of the largest companies in Israel, employing over 14,500 people. The aviation manufacturing division is responsible for 4,000 full-time positions on its own. (Haaretz)
#9. About 190,000 jobs are currently supported by the Israel aviation industry, with 24,000 of those positions being direct opportunities. Tourism is the most significant indirect benefactor of the sector, with 92,000 jobs available because of it. (IATA)
#10. Around $18 billion in gross added value comes from the Israel aviation industry each year. Supported by air transport services and foreign tourism, it accounts for approximately 6% of the GDP. (IATA)
#11. Almost $100 billion in exports is handled by the aviation industry in Israel each year. Another $93.3 billion in foreign direct investment helps the industry find new segments for growth on a regular basis. (IATA)
#12. One of the issues facing Israel is the lack of direct flight destinations to the fastest growing cities and countries in the world. Israel has just one direct flight to India and one to China during the average week. (IATA)
#13. There are five airports which serve the Israel aviation industry, ranking the infrastructure as 36th out of 42 countries in Europe and 72nd in the world. When included with European nations, however, Israel has the third-most open visa available, but it ranks 24th for cost competitiveness. (IATA)
#14. According to 2013 data released, the labor productivity found in Israel is 24% lower than all of the other OECD countries. That results in a lower investment rate, a higher volume of work hours per employed individual, and low competition levels in the business environment. (OECD)
#15. The total domestic flight aircraft movements through Ben Gurion have fallen since 2011, dropping from 9,358 for the year to just 5,981 for 2017. (Israel Airports Authority)
#16. Over 136,000 international flights were registered at Ben Gurion during 2017, about 40% higher than the movements recorded in 2010. (Israel Airports Authority)
#17. Domestic passenger traffic dropped to a 10-year low in 2017, with only 593,000 passengers served. (Israel Airports Authority)
Israel Aviation Industry Trend and Analysis
The security presence in Israel for the aviation industry is one of the most stringent in the world. Ben Gurion offers a reputation of being a place where innocent travelers are detained for hours at a time. There are stories of missed flights, intrusive personal and luggage checks, and even strip searches. With that kind of reputation, warranted or not, it reduces the desire of some travelers to visit.
There is also the issue of regional security to consider when visiting Israel. You are barred from entry to specific individual nations in the Middle East if you have evidence of a visit to the country.
Then there are the security stickers which apply to you. You’re profiled based on the risk you pose, which makes it another layer of difficulty for the average traveler while the security forces work to keep the country safe.
Growth in the Israel aviation industry continues despite these challenges because the country offers numerous benefits to the traveler. You’ll discover historical sites, modern urban centers, and stunning beaches to enjoy. Orders continue to flow in, but unless the value of that work offers profits, future growth will continue to struggle for this critical industry.
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