It’s no secret that the airline industry has issues. Soaring fuel costs, have left airlines scrambling for ways to increase revenues. Instead of just raising fares and cutting capacity, airlines have decided to nickel and dime travelers to death. Just yesterday the Israeli El Al airlines decided to start charging travelers more for seats in an emergency row. This follows other airlines charging for pillows, food, luggage…etc.

Customers are getting fed up with an ever expanding list of fees. In an age where most industries have made their fee structures much more simple, the airlines have decide to drive us crazy. ” Sir, you’d like ice with your beverage? That’ll be 3 bucks.” Or “Miss, I am sorry but since your shoes have high heels, that’ll be $2.”

You know, if airlines really wanted to be fair about each individuals contribution to the amount of fuel used per flight, and then charge accordingly, they could use the supermarket method. When we go shopping, for many items, we pay per pound. Fruits, vegetables, ground beef all priced according to weight. Why don’t the airlines follow suit? Why should someone who is thin, pay the same amount as someone with a bit more girth? After all, our weight-challenged traveler causes more fuel to be used than our thin traveler.

Stop the madness. Just raise fares. It’s that simple.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

With airlines around the world struggling with high fuel costs, labor disputes and continued client complaints about late arrivals, who would have thought that El Al, the Israeli  airline would actually be turning a profit?

Airline stocks like Continental (CAL), JetBlue (JBLU) have gotten pounded of late. El Al, which unfortunately only trades on the Tel Aviv Stock Exchange has held steady over the course of the year.

El Al reported earnings of of $40.7 million dollars for ‘07, a huge leap from the $33.9 million loss in ‘06. Revenues also jumped 16% in ‘07 to $1.93 billion.

How can the carrier be doing so well in such a lousy environment? The company was privatized a few years ago and the efficiencies that have been created by getting the government out of running the airline are starting to be realized. Also El Al has some very profitable routes, and they have been running at near full capacity on them. For example if you are thinking of coming to Israel from New York, it’s virtually impossible to get a ticket and if you can get one, you are going to pay a ton of money for it.

But if you want to know the real reason, it’s because they have VOD( video on demand) service on their new airplanes. This VOD is so cool. You can pick from a host of movies, TV shows, music, even play chess, on demand, whenever you want. All you have to do is touch the screen.

Disclosure: Author holds no position in any stock mentioned as of 3/27/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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