According to data from the Israeli Central Bureau of Statistics, tourism in Israel remains sluggish after a steep drop in the fourth quarter of 2023. The reopening of Ben Gurion Airport’s Terminal 1 and the resumption of low-cost airline flights could reverse this trend and boost Israel’s struggling tourism industry.
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Tourism is an important industry in Israel, accounting for 2.8% of the country’s gross domestic product and about 3.5% of total employment. Direct and indirect tourism employment accounts for about 6% of total employment in Israel.
Israel’s tourism industry was hit hard by the coronavirus pandemic but was on the road to recovery before the October 7 attacks. Since the attacks, much of Israel’s tourism industry has experienced shutdowns reminiscent of the coronavirus era. But while COVID-19 has had global impacts, the war between Israel and Hamas is a local issue. Many airlines have canceled flights to Israel, choosing to fly other routes instead.
Only 180,000 tourists visited Israel in the fourth quarter of 2023, down 82% from the 930,000 recorded in the same period in 2022.
“Looking back at 2023, it was supposed to be a record-breaking year for tourism in Israel,” Peleg Lewi, foreign affairs adviser at the Ministry of Tourism, told The Media Line. “We were averaging 15,000 to 20,000 tourists a day, but on October 8th there were only 26. The tourism industry was completely devastated.” Tourist arrivals by air to Israel, 2018-2024. (Source: Central Bureau of Statistics)
Religious tourism on the rise in Israel
Since the outbreak of the war, the number of tourists to Israel has been gradually increasing. “We are currently at about 25-30% of last year’s numbers, with 4,000-5,000 tourists per day,” says Louis. “The tourists we see now are different to previous years. Most are faith-based visitors – Diaspora Jews, Catholics, Evangelicals and other Christian denominations. Many are also involved in some form of volunteering or solidarity projects.”
After many airlines canceled flights to and from Israel, the Israel Airports Authority closed Terminal 1, which is used for budget flights. It reopened to low-cost international flights last week.
The Israel Airports Authority reported that the terminal handles about 1,200 flights and 200,000 passengers per month, with a peak of 6,500 to 7,000 passengers per day in July and August, when many Israelis travel abroad for holidays.
“It is understandable that people feel that it is still not safe to travel to Israel at this time, but this effort to reopen Terminal 1, which is served by many budget airlines, will benefit Israelis and will be psychologically very important for many,” Louis said. “Flights have become very expensive since Oct. 7, and we hope that some will be able to enjoy this morale boost during this time of war. Nevertheless, airfares and travel insurance remain more expensive than normal.”
Irish low-cost carrier Ryanair is the first low-cost airline to resume operations in Israel. Louis hopes the decision marks a turning point. “Eventually, other airlines will realise that despite the war, things have become somewhat normal and they will resume operations as well,” he said.
Israel’s successful response to the Iranian attacks in April sent a message to the aviation industry, Louis said. “Successfully thwarting 99 percent of the Iranian attacks achieved something they never thought possible: It proved that flying to Israel is safe,” he said. “Ben Gurion Airport was not at risk and there was no damage.”
Because flights to Israel are profitable for airlines, Louis said airlines are eager to resume service there as soon as it is safe to do so.
The aviation industry has faced unprecedented challenges in recent years. Aviation insurance expert Vikrant Sharma told The Media Line that airline war insurance premiums have risen five-fold since the Ukraine war began. Some of the major reinsurance companies (companies that provide insurance to insurance companies) do not offer hull war insurance, which covers damage to aircraft during war.
“The situation has been exacerbated by increasing sanctions, making it difficult to procure fuel, pay airport dues, receive spare parts support and receive loss compensation,” Sharma said. “The ripple effect is being felt across the global aviation industry, with skyrocketing aircraft war insurance premiums becoming the norm.”
The Israeli government has tried to implement policies to help recover damages. “The government has offered self-insurance options or guarantees to cover potential losses,” Sharma said. “This approach has already been adopted by various sanctions-targeted countries and provided a viable alternative for airlines to continue operating despite the heightened risks. All of this has been done to help protect the country.” [because] Political support from allies helped to facilitate continued operations and provided airlines with the guarantees they needed to navigate a complex insurance environment.”
Even after Israel successfully thwarted an Iranian missile attack, fears of an escalation have kept the aviation insurance industry on high alert.
“This tension could impact risk perceptions, especially in the aviation industry, where airspace safety is crucial,” Sharma said. “The Israeli government can take proactive steps to alleviate these concerns and restore confidence in the aviation industry. Providing clear safety guarantees and working with a major reinsurer to conduct a thorough risk assessment would reassure airlines and passengers. By engaging a reputable reinsurer that can provide an impartial and scientific assessment of the situation, Israel could build a stronger case for the safety of its airspace. This could force insurers to reconsider their positions and resume providing insurance, allowing aviation activity in the region to normalize.”
Rural tourism faces challenges
Even as airlines return to Israel, local tourism is likely to continue to struggle in the coming months. Assaf Ben-Ari, CEO of Bein Halim, Israel’s largest travel company, said the reopening of Terminal 1 is “great news, but unfortunately it doesn’t mean a big change for the inbound tourism industry, at least for now.”
“Thanks to this news, Israelis who go on vacation can find cheaper flights and more destinations, but the number of tourists visiting Israel remains roughly the same,” he explained. “Many of the tourists who visit Israel are foreign workers or Diaspora Jews who come to Israel to visit their families. It’s great that they can come to Israel, but they’re not tourists, so they don’t have the same impact on the economy.”
He noted that many tourists are interested in seeing communities along Israel’s borders, including those with Lebanon and Syria. “The reason we are not offering these tours is because there is still a lot of uncertainty and we cannot take the risk,” Ben-Ari said. “In fact, the risk is still too great for the average traveller, and we understand that. The whole industry is still aware of these risks. Many travel insurance companies have increased their prices or stopped offering insurance to tourists coming to Israel.”
Ben-Ari called on the Israeli government to step up support for the tourism industry, which will lose government support in the new year. “If we don’t see change – and so far the government hasn’t done much in that sense – the industry will continue to run at a loss and workers will suffer,” he said.
