American Had 840,000 Reasons To Launch New Service From Dallas To Tel Aviv

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American Airlines announced last week that they would resume flying to Israel with the launch of 3 weekly flights between Dallas and Tel Aviv starting next September.

I noted then that Dallas was an interesting choice as it has by far the smallest Jewish population of any other North American metro area that has year-round nonstop Tel Aviv service.

Now we know more about why Dallas won out over other options. YNet reports (in Hebrew) that Israel’s tourism ministry will award American 750,000 Euros, or about $840,000, for operating the route for at least 1 year.

Israel has been known to subsidize new routes and 750,000 Euros is the largest subsidy offered. El Al recently received 250,000 Euros for launching Las Vegas-Tel Aviv service, though that only operates once per week.

American’s hubs in Chicago, JFK, Los Angeles, and Miami already have or will have existing service and would not qualify for a subsidy. American’s USAirways predecessor flew from July 2009 to January 2016 from Philadelphia to Tel Aviv, before ending the route right after the airlines merged.

USAirways’ then president Scott Kirby, who moved to American before jumping ship to United, called the Philadelphia to Tel Aviv route among the most lucrative in their system. However American said the route was not profitable and didn’t have any forecast of profitability when they shut it down. I’d assume that Israel is not in the business of subsidizing previously failed routes, so that likely nixed the chance of a Philadelphia to Tel Aviv route revival.

That left AA hubs in Charlotte, Dallas, and Phoenix as the remaining options for Tel Aviv service if American wanted a route subsidy. American’s international flights from Dallas are also more profitable then the rest of their system, so Dallas was the obvious choice.

With a small plane to fill like the 787-9, just 3 weekly flights, and the $840K subsidy, American has very low risk with this new route.

So now we know that Dallas to Tel Aviv should stick around for at least a year. I’d guess by then American will know if they want to move it to a daily flight, as United did soon after launching 3 weekly flights from San Francisco to Tel Aviv. Alternatively they may keep it at that frequency, cancel the route, or move Tel Aviv service to another hub, such as JFK, Los Angeles, Miami, or Philadelphia.

Do you think the Dallas-Tel Aviv route will last after the 1 year subsidy is paid?

HT: Rabbi Moshe Rabin


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85 Comments On "American Had 840,000 Reasons To Launch New Service From Dallas To Tel Aviv"

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bukin86

They are attracting the bible belt Christian tourism…

David

Dan.
Can you please explain how much 840k is for a route in comparison to the costs and expenses

S Simon Jacob

I believe the Philadelphia route was nixed due to Americans relationship with ELAL? Why wouldn’t AA choose Chicago instead of Dallas…

Lol

Cute you think that money was taken into account

Chaim

No chance, unfortunately.

reb yid

840K is approximately the cost to operate one flight.

mick

The comment that Dallas “has by far the smallest Jewish population…” is a myopic view of tourism travel to Israel.

I don’t have facts to back this up, but based on my observation of non-El Al flights between USA and Israel, Christians far outnumber Jewish passengers on these flights, even from NY/NJ. Flights between Texas and Israel should be packed with Christian tourists. Smart move for AA to be first to enter this market.

[How many kosher travelers were on the 787 that landed in CLE a couple weeks ago? Only a small fraction of the plane’s passengers.]

I doubt $840K would influence AA. The company had $44 BILLION in revenue in 2018.

David

In 2018 twice as many Christians visited Israel than Jews (“Jews made up 27.5% of the tourists, but twice as many Christians visited – a staggering 54.9%“ Inbound Tourism Survey, reported by Jpost). The numbers are worldwide but the stats are probably similar in the US market too

rob

This “new route” subsidy is so illogical and arbitrary

There is no difference (from Israel’s perspective) for an AA DFW-TLV route and ORD-TLV route. Both would primarily do the exact same thing – give passengers a 1 stop option to get to TLV on AA. Neither route would (primarily) focus on O&D, and to the extent that there would be O&D, Chicago’s would be greater even with El Al competition.

Yet Israel will pay AA money to fly from Dallas, but not from Chicago.

You’re basically discouraging airlines to fly out of major connection hubs which already “have” O&D service, but subsidizing routes that would be much less lucrative for Israeli tourism.

The Israeli tourism ministry will give money to LOT to start flying from a tertiary Polish city, but if ANA or JL wanted to start flights out of NRT, or UA wanted to start flights out of ORD….. no money for you. Even though it would provide orders of magnitude more tourism to Israel from places well beyond Tokyo and Chicago.

How does that make any sense at all?

Agoldsc1

In the big scheme of things, I can’t imagine that $840,000 matters much when talking about a year-long commitment to a distant international destination, taking into consideration the cost of fuel, staffing and overhead in TLV, tying up a new plane, take-off and landing costs, etc…, I don’t think that $840,000 even makes a dent. I don’t know numbers, but I imagine that just one month of substandard performance is sufficient to eat up the subsidy.

Learner burner 613

Sorry but 840k over a year is nowhere close to mitigating a loss on this route, no matter how you slice it.
It’s chump change.
Watch some wendover videos and you’ll see what the costs are…..

E

I’m not looking to get political (and certainly don’t want to offend Jews who may not be as affiliated) but the Jewish population of a given city is kind of a stretch and doesn’t tell the full story. Many Jews consider themselves Jewish by name only, are practically fully assimilated and/or intermarried, and don’t consider themselves Jewish outside of a jar of gefile fish. Sadly, a handful of progressive Jews don’t ever want to go to Israel and a select portion believe it is an oppressive state (picked up from their universities). So, I don’t feel like it’s smart business strategy to choose a city solely based on it’s Jewish population. San Francisco has hundreds of thousands of Jews (hardly anything certified kosher there), but the roue is successful largely because of technological business, not to go to spend Succos by the Kotel.

Moshe

Wouldn’t the safest choice be JFK? There are indeed many existing JFK-TLV flights but the those flights seem to me to fill up much more than the average international flight meaning there should still be plenty room for AA to come in as they already have a massive hub in terminal 8

Slambowowskistienfeldbergermanhouse

Airlines know who their audience is. They know from passport information, and various state databases. They also know for instance how many east coast to TLV direct passengers originated from tx middle america etc.
That is the only way they would take this gamble. The $840k can only mitigate $840k and that seems like a drop in the bucket for a year long contract. I think that’s what’s up.

David

So they can just cancel in a year, open a new route from Charlotte, cancel a year later and open a new route from Phoenix. Three years of subsidies. American would be churning routes like we do credit cards

Good point

techinically, they would get past 5/24 with this one.

rob

When I tried getting a retention bonus to keep the DFW flight, the CSR said they don’t offer one.

Has anyone had success with PUTPAC, or are they firm on this? Can I reapply in 24 months and get the bonus again?

AL

We have no idea why the Israeli government would want to finance a route over another. If you just start thinking about “religious Jews” as the prime passengers on a specific route you are entirely incorrect, they could make up a large portion of passengers but not the entire flight.

If you think of the direct flights to/from SF, you realize a large serviced demographic are technology companies that do business with Israel in one way or another (remote offices, subsidiaries, acquisitions and so on).

I know for a fact that AA and the Israeli government have more data on possible passengers for this flight route than we do. I would guess that they are primarily targeting stop over flights from various locations in the middle of america, as stated earlier probably parts of the bible belt and “religious Jews” looking for a good deal, we all know people are willing to make a ridiculous stopover for a good price. There is also a growing startup scene in Austin (which is already very big) that they may want to tap into.

sam

what happened to the issue of American not flying to isreal because they were scared of their planes being impounded because of the old TWA debt?

william l gewirtz

Dan, do you expect award travel availability??

Bob

USAirways is not the predecessor of American. USAirways merged with American in 2013, after American filed for bankruptcy in 2011. American stakeholders then owned 72% of the company; USAirways shareholders owned 28%.

Bob

According to a December 27, 2018 article in Haaretz, “the airlines are required to use the money for marketing in their home countries travel to Israel.”

“Since the program began the biggest recipients have been LOT Polish Airlines, which has received 2.05 million euros for seven new weekly flights. The low-cost carrier Ryanair has 2.3 million for eight weekly flights from Poland. Wizzair is the biggest recipient of them all with 3.3 million for 12 flight’s weekly. Air India is expected to get 750,000 for its new New Delhi-Tel Aviv route.”

One of the best quotes is from a hotel executive in Eilat.

“If the Greeks, the Jordanians, the Egyptian and even the Spanish Canary islands do it, we also need to play the game,” said Shabtai Shay, the director of the Eilat Hotels Association.

“You can’t keep saying to the airlines, ‘Well, Jesus was born here and the sun shines all year’ to get them to open new routes to Israel. You have to offer them a financial incentive,” Shay said.

David

Actually, I think this route may be very successful
Firstly it caters to a whole new area in the USA and there are many evangelicals that support Israel that will use this flight to visit and support their causes in Israel.

Shneur

More missionaries watch out!

KSMH

Interesting, AA is being subsided.
Maybe the big 3 shall complain and request a meeting with Trump.

qsman

Maryland subsidized BA’s daily LHR BWI flight to the tune of $5.6M per year. The last funding round covered 2017 & 2018, I assume that 2019 is funded as well. For BWI it is a source of kovod to have that prestigious (?) flight.

Us spotters appreciate the 787-9’s appearance that replaced the 767…

Eric from Dallas

Friendly message in advance to all our new friends from Israel (and the US) who will be enjoying this new flight to Dallas – please stay for Shabbos! Shaare Tefila (google us) can arrange meals in our member’s homes if you give us a little advance notice. Also, if Gd forbid any travelers get stranded in Dallas on the way home, we’ll be happy to do whatever we can to get you kosher food or Shabbos hospitality – there are a number of restaurants and caterers in town…

daniel drabkin

I think there is another piece of the puzzle here. Lots of technology companies in Dallas and Austin. Never underestimate what you don’t see. Did the technology sector in Israel ask for this flight, did AA’s corporate sales team hear from their clients that this will increase Dell and others spending. That’s money spent at the front of the plane.

elchonom

Not sure about Dallas, but ive met many oil-related flyers on planes to Israel, assuming they come from Houston etc

JO 08701

I believe the Israeli Tourism Ministry has some data, and they see that they can still grow the Tourism industry from Christians in the Southwest/Midwest.
Adding a flight which will make it more convenient for Jews, will not really bring more travelers to Israel, as Jews will anyway go there, it will only make it more convenient for the traveler, however the Tourism Ministry is not here for that reason, they are here to bring new tourists.
However, giving an easier option for regular Americans to spend their vacation time in Israel vs any other city in Eastern Europe, can bring new visitors to Israel.
I believe that’s the reason they gave a larger subsidy here than usual.
That is probably also the answer why they are subsidizing more North American cities, as Israel is very easy for Americans, all the signs are in English, most Israelis can communicate in English. It will be much harder to get that amount of tourists from Japan or Korea or any place in Asia, and to some extent even Eastern Europeans.

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