El Al Could Expand to India, Southeast Asia With Saudi Airspace Opening

After two pandemic-stricken years defined by new travel restrictions and reduced mobility for airlines, at least one region — the Middle East — is moving in the opposite direction.

Saudi Arabia, in conjunction with a visit by U.S. President Joe Biden, said on July 14 that it would open its airspace to all airlines. That effectively means an end to restrictions on aircraft flying to and from Israel, which currently must fly around Saudi airspace. Reuters, citing a U.S. official, reported that the Saudi government would soon grant Israeli airlines overflight access, as well allow direct charter flights from Israel for Muslims participating in the annual hajj pilgrimage in Mecca.

The relaxation of restrictions follows a 2020 agreement that established nonstop flights between Israel and the United Arab Emirates — flights for which Saudi Arabia made an exception and allowed through its airspace. Today, Emirates, Etihad Airways, FlyDubai, and Wizz Air's Abu Dhabi division all take advantage of that exception with nonstop flights to Tel Aviv. Gulf Air also flies between Bahrain and Israel. And, Saudi Arabia made an exception in 2018 for Air India to overfly the country on its flights to Tel Aviv.

The three main Israeli airlines — El Al, Arkia, and Israir — offer scheduled service to the United Arab Emirates. However, the latest move by Saudi Arabia stops short of allowing the airlines to offer scheduled flights to its territory. But that could be the next step given Saudi's push to diversify its economy away from fossil fuels and increase tourist numbers.

El Al is best positioned to benefit from the reopening of Saudi airspace. Even absent the opportunity to serve the country, the carrier's routes to countries like India and Thailand will benefit from shorter routings that saves time and fuel. El Al could add more India flying — particularly now that it is not at a competitive disadvantage to Air India — as well as new routes to other points in Southeast Asia. Flying through Saudi airspace also makes potential service to Australia a more realistic possibility.

Israeli airlines, however, still must avoid much of the Middle East's airspace, including the skies over Iran, Iraq and Syria.

Economic motivations for Saudi's airspace reopening aside, Gulf countries and Israel are becoming closer diplomatically because of geopolitical considerations, particularly the common security threat they see in Iran. The U.S., a provider of financial and military assistance to both Israel and the Gulf states, likewise views Iran as a threat to its interests.

The easing of Saudi's restrictions, even in a limited state, is certainly a welcome development for airlines. All the more so at a time when China’s airline market is barely open to foreign airlines, and Russian airspace remains closed to most airlines following its invasion of Ukraine.