During her trip to Budapest last week, the timing and cost of which came in for public criticism, Minister of Transport Miri Regev’s bureau announced to the media that in a meeting she held with Jozsef Varadi, CEO of Hungarian low-cost airline Wizz Air, it was agreed that “a work team will be formed to examine the setting up of a hub of the airline in Israel.”
The announcement made waves, since Wizz Air has a fleet of 230 planes, and a hub in Israel would dramatically increase competition in the aviation sector, both on price and through the expansion of the number of destinations.
“This is huge news for the Israeli public, especially in a period in which some foreign airlines are reducing their activity,” a statement on Regev’s behalf said. “We will increase the offering of flights and destinations of aviation giant Wizz Air, with low prices that will restore power to the consumer.”
Sources in the government and the aviation industry do not share the joy, arguing that the initiative is not feasible, because of regulatory and competition problems, and because of disputes over the required flight times and locations, of which there is a shortage.
Meanwhile, the Histadrut (General Federation of Labor in Israel) has demanded that the Ministry of Transport should halt the move and coordinate with it. “Any arrangement that takes into account only a small number of particular interests will endanger the stability of the Israeli airlines… and as a result will endanger the stability of the whole industry,” the Histadrut claims.
Regev announced the formation of a team to work vis-à-vis Wizz Air, but an inter-ministerial team began working on the opening of a hub long before Regev’s visit to Budapest, at Wizz Air’s request. Several problems arose, however, and it is doubtful whether they can be surmounted.
Following Israel’s “open skies” reform, any European airline can operate a flight from Israel to any destination in Europe. Since 2012, Wizz Air has operated flights from Israel to various European destinations, and it has take-off and landing slots allocated to it.
The location of an airline’s hub determines where its planes will finish their journeys, and start again the following day. This is the competitive advantage of Israeli over foreign airlines, as they can operate flights using the first and last slots of the day, catering to passengers who wish to take early morning outbound flights and return late at night. A hub in Israel would require similar slots being allocated to the Hungarian airline.
The other side of the picture is that the Israeli airlines are bound by regulation that does not apply to the foreign airlines, including wage agreements and security services agreements with El Al, which supplies these services. So if Wizz Air opens a hub in Israel and seeks registration as an Israeli company, the same regulatory regime will apply to it. According to industry sources, there is no obvious reason that this would pay off for Wizz Air.
On the other hand, if Wizz Air remains a foreign company that operates a hub in Israel and competes for the slots in greatest demand without local regulation weighing on it, the Israeli airlines will be left with no advantage. In the closed discussions, the professionals have made clear that this will gradually lead to the collapse of the Israeli companies, although it should be remembered that the Israeli companies warned of their collapse before the signing of the “open skies” agreement as well.
The Israeli airlines are important economically and strategically, since they continue to fly even during crises. There have been plenty of examples of this in the past couple of years, and they have yielded record profits for the Israeli companies. Yesterday, Lufthansa Group announced that it was extending the period of suspension of flights to Israel until June 22 (inclusive), after announcing cancellation of flights until June 15 last week.
Wizz Air’s opportunity
Wizz Air’s interest in setting up such a hub in Israel is clear: it’s a substantial business opportunity, because the company will be able to enter a profitable market and take it over within a short time. The company’s size enables it to procure equipment at a discount, its wage costs are much lower than those of the local airlines, and the market conditions are tempting.
The Israeli aviation market breaks down into segments: tourism, business, religious tourism, and family visits. From a macro-economic point of view, the business segment is the most important, and in that segment there is no crisis in the supply of flights. In the tourism segment, by contrast, demand in Israel is flexible. While the top three socio-economic deciles are associated with specific destinations, lower deciles are more flexible in the choice of vacation destination. After Turkey ceased to be an option, for example, routes to the Baltic countries started to flourish.
Overall demand in Israel is fairly rigid. Market analysis also shows that the Israeli travelling public is more sensitive to price than travelers in Europe. As far as the Hungarians are concerned, all these factors mark Israel as a target for a hub, similar to the ones they have set up in other countries such as Malta, Abu Dhabi, and the UK.
In order to benefit from all these aspects of the Israeli market, Wizz Air is demanding that the hub should be at Tel Aviv’s Ben Gurion Airport, and not at Ramon Airport near Eilat, as was initially proposed by the Ministry of Transport. The problem at Ben Gurion, however, is that there is already a severe shortage of slots, particularly morning slots, which are essential to the economic viability of a hub.
Published by Globes, Israel business news – en.globes.co.il – on June 4, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
