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Israel flight cancellations tip of economic iceberg

by Felice Friedson and Linda Gradstein, The Media Line

July 23, 2014 | 9:04 am

<em>Passengers and airline staff stand near a check-in desk of an airline that canceled its flight out of Tel Aviv at Ben Gurion International airport on July 22. Photo by Siegfried Modola/Reuters</em>

Passengers and airline staff stand near a check-in desk of an airline that canceled its flight out of Tel Aviv at Ben Gurion International airport on July 22. Photo by Siegfried Modola/Reuters

This story originally appeared on themedialine.org.

Esther Olive, a French Jew who lives in Israel, is stranded at the Istanbul airport and is petrified.

“People from the airline screamed at us and said that we couldn’t stay in the airport and had to go to a hotel,” she told The Media Line by phone from Turkey. “As a Jew, I just don’t feel safe here.” 

Olive, a tour operator who brings French tourists to Israel, was on her way back from a family vacation in France on Pegasus, a Turkish charter airline. She said she was with a group of 70 Israelis and Jews that was stranded in Istanbul after almost all international carriers cancelled their flights in and out of Ben Gurion International, Israel’s primary gateway outside of Tel Aviv. The drastic response came after a rocket fired from the Gaza Strip landed inside a community nearby the airport, destroying a house. Until then, during the two-week old hostilities between Israel and Hamas, all rockets that came close to the airport were intercepted by the Iron Dome anti-missile defense system. Olive and the others went to a hotel for the night and then returned back to the airport.

“Why isn’t anyone helping us?” she asked nervously. “Why isn’t El Al sending a flight for us?”

Israeli government officials told The Media Line they were aware of the situation and were working to solve it. The Department of Transportation issued a statement saying that four aircraft would fly to Turkey to bring thousands of stranded Israelis home. The Ministry's statement said in part that, “the Israelis in Turkey need to stay calm. We are working to bring you back as soon as possible.”

Following announcements by individual airlines that their Tel Aviv flights would be cancelled, and the Federal Aviation Administration (FAA) directive to avoid Ben Gurion Airport for at least 24 hours, Israeli Prime Minister Binyamin Netanyahu appealed to Secretary of State John Kerry, who is in the region trying to mediate a cease-fire, to convince US airlines to start flying again. Coincidentally, Kerry’s own State Department plane presumably landed at Ben Gurion during the time stated in the FAA advisory.

“Canceling flights to Israel was a disaster for the country,” Mark Feldman, the CEO of Jerusalem-based Ziontours, told The Media Line. “It is the worst thing that has happened to tourism here since 9/11.” Feldman noted that even during the previous two Israeli military incursions the present operation is being compared to, in 2008 and 2012, the airport remained open.

Even before the FAA decision, economic damage to Israel’s tourism and hospitality industries was estimated to be at least $500 million, spurred by a 34 percent drop in the number of foreign visitors in the third quarter of the year – the key tourism months of July, August and September. A further predicted loss of $25 million will come from a decline in domestic tourism as many Israelis who had planned vacations inside of Israel cancelled them, typically after a family member was activated into reserve army duty. At the moment, some of Tel Aviv’s most popular hotels are almost empty, although properties in the southern Red Sea resort town of Eilat and hotels on the Dead Sea, remain near capacity.

How much time it will take for a tourism rebound when the dust settles remains to be seen. Yaakov Fried of Da’at Educational Expeditions, told The Media Line that it depends on how the hostilities end. “If there is a clear resolution and the rockets stop, it will happen quickly,” he opined. “But if the ceasefire is uncertain and there are still rockets, it will take longer to rebuild.” November and December are key indicators according to Fried.

Despite the pinch being felt by small businesses, some experts are relying on Israel’s historic resilience in bouncing back after such campaigns. 

Adrian Filut of the economic newspaper Globes says that losses are evaluated in the categories of military expenditures; indirect and direct costs. He told The Media Line that he believes if Operation Protective Edge extends another week, the total cost to the Israeli economy will be $2.1 billion, including the loss of trade and services and other ancillaries. 

The Pastry Shop – Baked from the Heart is a chain of three coffee shops/bakeries, one of which is located in the central Israel Tel Aviv-area Ra’anana, while the other two are in the southern towns of Ashdod and Netivot, both within the most frequent range of missiles from Gaza. Owner Binyamin Maimon says business is down by 50 percent because of the situation in Gaza. 

“Because of the rocket attacks, people are not going out to have coffee,” Maimon told The Media Line. “Some of our workers have to get to work under missile fire. But we are opening every day and trying to have business as usual.” 

After The Pastry Shop’s name and number appeared in an Israeli newspaper, Maimon received dozens of calls from Tel Aviv area residents placing orders. While the amounts so far have been symbolic rather than substantive, he said he is touched. 

“It is like getting a big hug,” Maimon said. “It is really heart-warming.”

A spokeswoman at Israel’s tax authority said they had extended the July 15 deadline for paying taxes as long as needed and were preparing to compensate businesses for damage and lost revenue. 

In the coastal Mediterranean city of Ashkelon, hotels and beaches are empty. Residents spend most of the day inside bomb shelters or safe rooms, as hundreds of rockets fired from Gaza have landed here or have been intercepted by the Iron Dome in the skies above. Prior to the current conflict, Ashkelon was one of the up and coming real estate markets in Israel.

“Now business is down by 50 percent and everything is completely on hold,” David Zwebner, an American-born entrepreneur told The Media Line. “People are home eating chocolates, going to funerals, and waiting.” 

During the past two operations Israel fought in the Gaza Strip, most of the Hamas rockets landed in southern communities like Sderot, Ashdod and Ashkelon. This time, however, despite the majority falling there, Hamas has made good on its threat to reach all parts of the country with its rocketry.

Ro’i Gafni, the head of sales and marketing for Afridar, a large construction company, is in the midst of building a mall and two luxury housing developments in Ashkelon. He was called up for reserve duty and confirmed that purchases have been put on hold for the duration of hostilities. 

Yet, there is reason for optimism for Israelis who fear the long period of time it could take to rebuild economic sectors such as tourism. Globe’s Filut points to the aftermath of the 2006, 2008 and 2012 military operations, including the costly Second Lebanon War.  

“Even now, during the fighting, you can see a rapid recovery. Look what happened to the dollar. You can almost say there wasn’t a war here. The shekel got stronger toward the Euro and the dollar. The opposite should have taken place during a war. On Israel’s stock exchange, the major indexes are higher today than before the war. This is what happened during the last wars. It’s a clear sign the Israeli economy is resilient.”

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