Tom Otley asks El Al's boss, Uri Danor, about the airline's expansion, updating the fleet and the challenges the airline industry faces in the months ahead
Q You've been in your position for almost five years - what are the biggest changes you've seen during that time?
A: The whole business environment has changed. A short while after I started, Israel and the UK signed a new air service agreement [to liberalise airspace]. Before that time only two airlines were permitted to fly between the UK and Israel - British Airways and El Al. From our business perspective it was very convenient because the only option was charter flights, but after the agreement the whole picture changed and it became more interesting. Two airlines decided to join the race because they saw that Israel had increased traffic. From one side we had bmi, which started to fly daily from Heathrow and, at one point, moved to two flights daily with a wide-bodied aircraft. The other airline was easyJet, a low-cost carrier. At that time we were flying to Heathrow and added Stansted from time to time when we needed more capacity. Personally, I liked the new competition - before it was boring. For me, when you have competition, you can use all your capabilities and creativity. We had two options. One was to shrink and give up on some of our customers and try to make money on less capacity. Such a policy is good for the short-term - your profit can be good - but for the long-run you can lose your customers to your competitors. The other option was to expand and fight, both in terms of product and frequency, and that's what we did.
We couldn't expand at Heathrow because of slot limitations, but as we have a lot of customers around the north of London, we decided to use Luton airport. It's very convenient and quick to get through. From arrival at the airport you can be airside in less than 20 minutes, and on landing, it can be less than 10 minutes. However, Luton is known as low-cost and we were afraid the image of the airport would affect us so we ensured all our passengers could use the priority lane. We also adopted the lounge there [exclusive to El Al] and invested in it - and within a very short time the flights were full. From Heathrow the earliest departure was 15.30, so we scheduled the Luton flight at midday. Now we are double-daily from Heathrow and daily from Luton, although it changes from time to time depending on demand. One of the Heathrow flights is usually a B747, and we use B777s and B767s depending on the season.
Q As country manager, is it more difficult to improve onboard product from the UK when you're using the same fleet as the rest of El Al?
A: You have no choice - you have to invest. We changed the configuration of business class, and for the older aircraft, which didn't have the most advanced in-flight entertainment, we provided portable DVD's - free for business class, and with a small charge for economy class passengers. And we changed the food. We don't have any issues with passenger satisfaction, we get very high scores and this is one of the biggest assets of El Al. The staff are very professional, service-orientated and very well educated. The airline is principally point-to-point from the UK as the timing of the Heathrow flight does not enable us to have onward connections in Tel Aviv. Now we have the Luton flight and suddenly we can get traffic going via Tel Aviv to Johannesburg and Beijing and Hong Kong. Connections are more difficult with Bangkok because we have to fly the long route, not being able to overfly certain countries. Flying into the UK, passengers arrive at Heathrow and then continue with American Airlines with whom we code-share.
Q Where do you stand on loyalty programmes?
A: We have invested in a loyalty programme for the SME [small- and medium-sized enterprises] sector - creating the Embassy Programme so companies can earn, as well as the individual flyer. It can be used for upgrades and free tickets, and travel manager gold card status. It started slowly, but it has picked up now. We have quite an attractive frequent flyer programme, El Al Matamid, and there is a programme - the Family Flyers Club - where the whole family can earn together.
Q Does El Al have to make a profit?
A: Yes, we are a private company with shareholders. If we don't make a profit we will close. It's not a state-owned company.
Q Is not flying on the Sabbath difficult?
A: It's a big dilemma. On the one hand, we think we should fly daily operations like any other carrier; on the other, a very substantial part of El Al passengers to the US are strictly orthodox, and they are important to us. And it's a strict business decision for them - the fact that we don't fly on the Sabbath is very important to them, and they choose us ahead of the competition because of that. The income from this group is second only to the business traveller and since there is less business travel on Saturdays anyway, it isn't so bad, but yes, it is a problem because there are costs involved in not flying. It's the customers telling us not to fly on the Sabbath, not El Al telling its customers.
Q What do you think the future holds for you and El Al?
A: I would like to be involved in business development with El Al, because I feel that with the competition we face now, we need other ways of raising revenue. It's not just about selling tickets but is becoming a total travel company around the ticket [selling car hire, hotels etc]. We also have to look at the low-cost activity to Israel from the UK, Switzerland and Germany, for example. Israel is an expanding market, with immigration and a good economic climate. We are very strong there. But we live in a transparent world where everyone can see that and more competition is coming every day. On the US routes, for instance, we have US Airways, Continental, Delta and Air Canada all competing with us. One of the biggest developing markets is between Israel and Russia. It helps that there are so many people who came to Israel from Russia and that so many in Israel now speak Russian. The other practical reason is that there is no need for a visa for Israel, which helps a lot.
- Uri Danor is El Al's CEO for UK and North Europe and has worked for the airline since 1983 in several roles, including operations research, commercial planning, general manager in the Netherlands, marketing and vice president before becoming CEO in 2007. Danor has a BSc in management and industrial engineering, and speaks fluent Hebrew and English.