Israeli flag carrier El Al is reportedly in the process of acquiring fellow Israeli airline Arkia. First reported by Israeli media on Monday, this consolidation of the country’s aviation industry would leave just Israir as the only other operator.
Purchasing Arkia
While not much news has yet to come out about this potential purchase, it would represent a massive shift in the Israeli aviation sector. Indeed, it would see the largest carrier in the country absorb the second-largest.
Reporting by The Jerusalem Post indicates that El Al is in the preliminary stages of this acquisition and emphasizes that there is no guarantee that this deal will go through.
Simple Flying reached out to El Al for comment but did not receive a response from the carrier at the time of publication.
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What does El Al have to gain?
When it comes to mergers and acquisitions, El Al’s possible absorption of Arkia is undoubtedly on the smaller side, immensely eclipsed by the recent Korean Air takeover of Asiana.
However, El Al would gain some next-generation long-range narrowbodies and orders for new Airbus widebodies, making it a fairly mixed fleet.
In fact, Arkia was the recipient of the first-ever A321LR and has two of these in its fleet at the moment. These are relatively new at just under three years old. While the airline had ordered four, ch-aviation.com data indicates that Arkia has just one more Airbus A321LR on the way, hinting at an order cancelation. Arkia also has a small fleet of Embraer ERJ-195s, which are an average of 7.6 years. The Israeli airline has two A330-900neo aircraft on order, with options for another two.
In addition to its aircraft, El Al could gain airport slots and rights at various airports. As of this week, FlightRadar24.com indicates these are the destinations that Arkia is operating to:
- Amsterdam (Netherlands)
- Barcelona (Spain)
- Batumi (Georgia)
- Budapest (Hungary)
- Dubai (UAE)
- Larnaca (Cyprus)
- Prague (Czech Republic)
- Rome (Italy)
Regulatory approval?
We’re not sure exactly where El Al is in the process of its acquisition. However, we can imagine that the deal will need to receive regulatory approval, as is quite common in many countries.
In the case of El Al and Arkia, permission is likely required by the Israel Competition Authority. On its website, the organization states that the Competition Authority and its leadership “are responsible for maintaining and promoting competition in the Israeli economy.”
This spirit of competition is something valued by the government, which, in 2013, enacted the “Law for Promotion of Competition and Reduction of Concentration.” Explaining its principles on competition and concentration, a government document notes that “a high level of concentration of the economy leads to market distortions and failures, which undermine economic growth and the ability of the laws of free economy to advance efficiency and consumer welfare.”
With a potential further concentration of Israel’s airline industry, we will have to wait and see if government regulators see this as a move away from healthy competition. At the same time, this merger could be seen as a way for Israeli airlines to better compete with foreign rivals- which undoubtedly have a sizeable share of the market when it comes to travel to and from the country.
What do you think of this potential acquisition? Are you for or against it? Let us know in the comments.
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