Israeli businesspeople plan setting up new airline

Blue Bird credit: Shutterstock
Blue Bird credit: Shutterstock

Kavei Hufsha, which already owns Greek airline Blue Bird and Cypriot airline TUS, has begun the process of establishing an Israeli airline.

Israeli tour package group Kavei Hufsha (Holiday Lines) is planning to set up a new Israeli airline. The company, which already owns Greek airline Blue Bird and Cypriot airline TUS, would focus with the new airline on short-haul flights to destinations within four to five hours of Israel.

The process of establishing new airlines is complex and lasts at least 18 months, with the licensing procedures with Israel's Civil Aviation Authority (CAA) included in the process likely to take six months. If all goes as planned, the company will consider purchasing aircraft or leasing them on a dry lease, in which the aircraft is rented without a crew, and the flights will be operated by Israeli crews. The process is currently in its early stages, and Kavei Hufsha has yet to begin the licensing process with the CAA.

Restricted as European airlines

Kavei Hufsha owns two European airlines, but because they are European, they are restricted to operating flights from Israel to Europe only. This restriction does not allow them to expand to destinations outside the continent, such as to Georgia or Dubai - destinations, which the company is currently targeting.

The airline would also take into account the possible expansion of the Abraham Accords, and the day when Israelis would also be allowed to fly to Saudi Arabia.

The restrictions on European airlines stem from Israel’s bilateral aviation agreements, which are designed to protect local airlines and limit the activities of foreign companies on routes that directly compete with Israeli companies. These agreements also limit the right of foreign companies to operate flights between countries other than their home country.

For example, a European airline cannot operate direct flights from Israel to countries in Asia or Africa, because the destinations are not part of its home country. The main purpose of the restrictions is to maintain fair competition and prevent foreign companies from overexploiting the local market.

Hungarian airline Wizz Air does operate direct flights from Tel Aviv to Abu Dhabi. But this is because of the structure of its subsidiary, Wizz Air Abu Dhabi, which is a company registered and regulated in the UAE.

The operations of Blue Bird and TUS have increased the appetite

Kavei Hufsha, which is owned by Ami Cohen and Arnon Englender, is one of the largest companies in the field of tourism in Israel. The group has owned Greek airline Blue Bird since 2016, and in March 2024 acquired a 33% stake in Cypriot airline TUS. Earlier this month, it completed the acquisition of all TUS's shares. The group also owns the tourism websites 90 Minutes and Blik Tourism.

Over the past year, Kavei Hufsha has seen a major increase in the activity of the airlines it owns. Blue Bird rose from 11th to sixth in terms of market share at Ben Gurion Airport, with a 24% increase in the number of passengers carried compared with 2023. TUS climbed from 23rd to eighth, with an increase of 10% in the number of passengers.

Over the past year, the companies operated relatively continually to and from Israel, except for a brief halt following the recommendation of the European Aviation Safety Agency (EASA) last September to avoid flights to Israel. This recommendation led to a major wave of cancellations, which continued until the ceasefire with Hezbollah at the end of November. TUS was the first company to resume its flights to Israel after the recommendation was lifted, following pressure exerted by Kavei Hufsha on the Cypriot Aviation Authority.

Ami Cohen, one of the owners of Kavei Hufsha, said, "The new company, when established, will operate alongside Blue Bird and TUS, which will continue their normal operations with flights to Israel. We are proud of Blue Bird and TUS, which were almost the only foreign airlines that continued to fly to Israel in the past year.

Is the Israeli market ready for another airline?

Currently, there are four Israeli airlines operating in Israel: El Al (including its subsidiary Sundor), Israir, Arkia, and Air Haifa. The latter began operations last year, at a time when the presence of foreign airlines in Israel was minimal.

Initially, Air Haifa was unable to operate flights from its home airport in Haifa, due to the closure of airspace and war in the north. Now, after several months of operations, the company operates direct flights to Larnaca, Athens, and Eilat from Haifa Airport.

Air Haifa's entry into the market was good news, mainly for residents of the north, although the aviation industry has doubts about its operating model. The company continues to operate and develop, perhaps precisely because it is the only operator from Haifa Airport.

Unlike Air Haifa, a new airline operating from Ben Gurion Airport would face sterner competition from companies such as Sundor, Israir and Arkia, which operate routes to destinations outside the EU such as Georgia and the UAE.

Market sources are skeptical that an airline that focuses on nearby destinations outside the EU would be attractive enough, since the possible destinations for short-haul flights from Israel are limited.

Possible destinations include Moldova, the Balkan countries that are not in EU, Albania, the UAE, Ethiopia, Kenya, and if the airspace over Oman is open - also India and Sri Lanka.

Regarding countries such as Turkey, Egypt and Morocco, which are within flight range, it is unlikely that an Israeli company will operate flights to them in the foreseeable future for security reasons. However, if the company operates on a model similar to Israir's, as a tourism company that also operates an airline, then this makes the feasibility of economic success higher.

Published by Globes, Israel business news - en.globes.co.il - on January 29, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.

Blue Bird credit: Shutterstock
Blue Bird credit: Shutterstock
Eitan Yochananof and Eyal Ravid credit: Eyal Izhar and Tali Bogdanovsky Regulator indicts Victory, Yochananof CEOs over price fixing

The Israel Competition Authority today issued first indictments, following the food price fixing investigation.

Shekel credit: Shutterstock Vladirina 32 Shekel gains continue as Gaza talks progress

The shekel continues to trade at its strongest levels against the dollar since early 2023.

New York credit: Shutterstock Tel Aviv - New York fares stay high despite US airlines return

Ticket prices to the US will continue to cost at least $1,200 return, according to Ophir Tours, with most fares ranging between $1,500 and $2,000, or even more.

Greenfield Partners team credit: Eyal Toueg Greenfield Partners closes $400m third fund

The funds were raised from institutional investors in Israel, the US, Europe and Asia and brings the total funds under management to more than $1 billion.

Blockaid founders Ido Ben-Natan and Raz Niv credit: Liron Weissman Israeli onchain security co Blockaid raises $50m

Blockaid protects the largest companies building onchain, including Coinbase, Metamask, Stellar, Uniswap, and World App.

Air Haifa  credit: ATR Air Haifa to launch Paphos flights

New Israeli airline Air Haifa will launch a new route between Haifa and Paphos in Cyprus on April 3, 2025 with six weekly flights.

Bladeranger Deepsolar credit: PR Bladeranger divests Deepsolar to Painreform in strategic move

Deepsolar, acquired by Bladeranger in early 2023, is a sophisticated software solution designed to optimize the management of photovoltaic solar energy fields.

Traffic jam on the Ayalon Highway in Tel Aviv credit: Shutterstock Tender issued for operating Tel Aviv congestion charge

Minister of Transport Miri Regev has dropped her opposition to the project, reportedly in exchange for financing railways to Kiryat Shmona and Eilat.

Ilya Sutskever credit: Cadya Levy Ilya Sutskever's SSI raising money at $30b valuation - report

The AI startup founded last year by OpenAI founder and former chief scientist Ilya Sutskever, is in talks to raise money at a company valuation of over $30 billion, "Bloomberg" reports.

Dina Ben Tal Ganancia  credit: Guy Kushi & Yariv Fein El Al stock still rising despite return of foreign airlines

The Israeli carrier's share price has risen 35% since the start of the year and some analysts predict further gains.

NIS 200 bills credit: Tali Bogdanovsky Reduction in cash holdings after NIS 200 bill abolishment talk

Since September 2024 there has been a dramatic decline in the number of NIS 200 bills held by the public relative to the number of NIS 100 bills, according to Bank of Israel data.

Teva CEO Richard Francis credit: Elad Malka Teva CEO responds to 25% share price fall

Richard Francis said that the question is no longer whether Teva will survive but whether it can grow more.

Holon employment bureau credit: Eyal Izhar Unemployment in Israel fell in January

The unemployment rate in Israel fell to 2.6% in January 2025, after seasonal adjustment, from 2.7% in December 2024, the Central Bureau of Statistics reports.

Dizengoff Center credit: Guy Hamoy Israel's economy grew 1% in 2024, above expectations

This figure reflects negative GDP per capita growth of 0.3%, because of population growth last year, the Central Bureau of Statistics reports.

Shalev Hulio and Sebastian Kutz credit: Pini Siluk and Dominic Butzmann Israeli co Dream Security raises $100m at $1.1b valuation

The company, which protects national infrastructures, was founded by former spyware company NSO Group CEO Shalev Hulio, former Austrian Chancellor Sebastian Kurz and Gil Dolev.

CyberArk CEO Matt Cohen and founder and executive chairman  Ehud Mokady  credit: PR $20b CyberArk becomes Israel's second most valuable co

The cybersecurity company's share price has almost tripled in value in the past three years.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018