Terminal 1 reopening revives Israel low-cost fare options

Terminal 1 at Ben Gurion airport has reopened to international flights after long months in which it was shut down. Last week the terminal reopened for domestic flights. During April about 1,400 international flights are scheduled to take off, representing about 25% of all flights at Ben Gurion airport including flights operated by El Al unit Sun D’Or, Ryanair, Wizz Air, Arkia, Israir, Transavia and Geogrian Airways. What is the significance for fares?

Not just competition: what causes the price gaps

The reopening of Terminal 1, which serves as the “home” for low-cost airlines, is also good news for passengers. With the opening of the terminal for international flights, the Irish low-cost airline Ryanair has returned to Israel and with it, double-digit US dollar round-trip fares from Israel return in May: Paphos for $32, Vienna for $54, and Rome for $91.

Although Ryanair is the most prominent in offering tickets at these prices, similar prices can also be found with Hungarian rival Wizz Air, with round-trip flights costing $85 to Larnaca and $112 to Crete in June. Israeli low-cost airlines Israir and Arkia are also offering tickets just above double digits, between $100-120 to Paphos, Larnaca, and Athens in April and May.

Besides increasing competition, there are several reasons for the price differences between Ryanair and the rest. Ophir Tours vice chairman Yoni Waksman explains, “One can clearly see the significant price gaps between the companies that are already active in the Israeli market and those that have not yet returned. The reasons for this are varied. On the one hand, the airlines that plan to return offer competitive prices in order to regain market share. On the other hand, the Israeli consumer has become more cautious and prefers to book with companies whose operations in Israel are stable and guaranteed.”

When an airline returns to the market, it is selling the first seats and can therefore afford to price lower than competitors on the market over time. According to the pricing method used in the industry, the first seats sold on each flight are the cheapest offered by an airline. The more passengers that purchase tickets, the higher the fare accordingly. At competitor Wizz Air, which has been on the Israeli market for several months, the seats being sold are not the first, and therefore it is more difficult to find prices similar to those currently offered by Ryanair.

Moreover, this is the price for a basic ticket without baggage. Additional baggage sometimes increases the price of tickets by hundreds of percent. We checked how much a suitcase would cost for a random Ryanair flight to Cyprus for $33. For a small suitcase (10 kilograms) for the overhead compartment, the cost is $39 each way, while for a suitcase in the hold of the plane (20 kilograms), the cost is $55 each way. In this case, the cost of the one-way baggage is higher than the cost of the round-trip ticket itself. This is especially common with low-cost carriers, where the pricing method used is that the fare varies according to demand, the date of booking and the occupancy of the plane.

Basic tickets are sold cheaply and sometimes even at a loss, but the main profits come from extras such as baggage, seat selection, in-flight meals and additional services. At Ryanair, revenue from ancillary services, which include baggage fees, has in recent years made up about 30% of the company’s total revenue.

More supply for underserved destinations

Last year, as this year, the start of the spring season has marked a certain recovery at Ben Gurion Airport. There has been relative calm in the security situation, and low-cost airlines (apart from Ryanair) began to return in March, and in April additional airlines will be resuming flights, hesitantly and with lower frequencies than usual, hoping to take advantage of growing Israeli demand for the summer season. In April and May 2024, almost 50 airlines operated at Ben Gurion Airport, a number similar to those operating today. Unlike today, Terminal 1 remained closed.

Just before Passover last year, Iran launched an unprecedented ballistic missile attack on Israel and grounding major airlines such as easyJet, American, Air India, Air Canada, and more, thus reducing the supply of flights to popular destinations.

This year, despite sporadic missiles from the Houthis, intercepted outside Israeli airspace, the situation is relatively stable. Not a single airline that announced a return has suspended operations in Israel, and many more airlines are returning with higher frequencies. While during Passover last year, for example, El Al was the only airline flying to New York, this year El Al, United, Arkia and from Tuesday Delta are all flying to the US.

To London, not only are there British and Israeli carriers to choose from, Wizzair is also an option and from June easyJet will resume flights to and from Ben Gurion airport. To Berlin, which has only been served by Israeli carriers, Ryanair is now an option.

Published by Globes, Israel business news – en.globes.co.il – on April 1, 2025.

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