Oz Berlowitz was appointed Arkia's CEO earlier this year, achieving closure after a 26-year journey in the company since he joined in 1998. Now he seeks to improve the company's performance and make it the second-best Israeli airline after El Al, Israel's flag carrier.
At the time, he was an international relations and political science student who decided to follow in his sister's footsteps to be a flight attendant. He was accepted into the airline's flight attendant course.
"I thought I was coming for a year," he said. "I accumulated hundreds of flight hours and was the sole flight attendant on a 50-person flight to Eilat, four times a day. It was an important learning experience to deal with a crowd. People are stuck together in a metal tube at 40,000 feet, and they express emotions, stress, medical conditions, and you have to deal with it alone."
Nowadays, as CEO, he works tirelessly to revitalize the company for his ambitious goal of overtaking Israir. Recently, he has been in the process of acquiring two travel agencies, each of which is expected to bring him a new audience or activity that complements Arkia's operations.
How do you plan to climb to second, and what are you doing to strengthen the weaker Arkia brand compared to competitors?
"The gap between us and Israir in terms of number of passengers is not that big. In terms of service and reliability, I place Arkia as the people's airline, not El Al with its legacy, but also not a low-cost airline. I brought in comedian Lital Schwartz to be our spokesperson. She's popular, speaks to everyone, funny. We changed our slogan to 'Want to travel abroad, travel abroad,' meaning that everything is simple. Israel acts like an island and so the desire for vacation is a real need, and Israelis are much more spontaneous than your average traveler. The British plan their vacation a year in advance while Israelis can buy last minute."
Since the war broke out, there have been several disruptions to flights to and from Israel, including flight cancellations and airlines suspending operations. It seems travel agents are coming back because people are not as enthusiastic about purchasing tickets online.
"It's true that agents are coming back. People have lost confidence in airlines and want someone to talk to in case there's a problem. Every day there are announcements about Israelis stuck abroad, sometimes for several days. That's also why they prefer to book everything together rather than order the flight and hotel separately. I can definitely say that today the average traveler is willing to pay more to fly with an airline like ours. He prefers to fly at 8 a.m. with Arkia rather than at 5 a.m. with a low-cost airline. The public already knows we won't cancel a flight because it's not full and not profitable."
Recently, we saw a court ruling in favor of a family whose flight back to Israel in Arkia was canceled, and you found them a different flight only two days later. They had to take care of their accommodations and the company was unwilling to reimburse them.
"We need to improve customer service, including customer service after the order has been made, and we are working on it. Currently, we have a call center with 20 people and an online chat, but it is not enough. I brought in a new customer service manager, who handles improving the customer's experience. I know we have to improve and another goal we have is to improve response times.
"On the other hand, it is not easy to manage an airline today with all the unexpected events we go through anywhere in the world. It's not just the war. The climate is acting up. For example, there has been an increase in significant turbulence that has injured passengers. I will never forget the night of the Iranian attack which closed Israel's airspace and then two days after that, Dubai was flooded. When a storm shuts down Dubai, a popular destination that we fly to three times a day, it disrupts the company's entire flight schedule. For two days, we had to land in other locations in the Gulf and transport the passengers to Dubai. A week later, our plane was grounded for five days in Dubai following a malfunction that affected the entire flight schedule. Despite all this, I can guarantee I have never abandoned a customer whose flight was canceled. I am responsible that they return to Israel, even if it takes a few days."
What are your goals for this position and what would you consider a success?
"We are investing a lot of effort in the digital revolution, to make the online booking process simple. My goal is to simplify purchasing flight tickets as much as possible. Meanwhile, we have a call center with 100 representatives in Arkia, and 30% of our bookings are made through them. Part of my agenda is that by 2025, 80% of the sales and customer service will be digitized. By the end of 2025, we will replace all the small planes with Airbus 321. The fleet will be uniform and easier to operate. We will have our 6-8 planes, and we will lease three more planes during the season's peak. As our fleet grows, so will our market."
Something for the soul
Going back 26 years, after Oz Berlowitz, 48, finished two years as a flight attendant, became a flight attendant instructor, then training director and then deputy director of the flight attendant department.
In 2006, Arkia was purchased and the newly appointed chairman Avi Nakash decided to promote Berlowitz to manage the Sde Dov terminal. In 2011 he became vice president of operations and was eventually promoted to deputy CEO and finally CEO.
When CEO Gadi Tepper retired in early 2024, Berlowitz was appointed CEO by Nakash, having been considered the latter's protégé. The two are close as Berlowitz tends to go horseback riding on Saturdays at Nakash's ranch in Moshav Beit Yitzhak. Berlowitz lives in Hod HaSharon, has two daughters and is married for the second time.
He met the mother of his children, El Al's chief flight attendant, at work. "My daughters are my first priority," he said. "It's easier to be a CEO than a father because the decisions are easier. In terms of schedules, I manage to combine the two. Luckily, I have a partner who is an amazing mother, and I learn from her how to be a better father than a CEO."
During the COVID-19 pandemic, in contrast to El Al and Israir, the owners of Arkia decided to shut down operations for several months to cut losses. "The company was shut down for seven months, and looking at it only from the commercial aspect, their decision was right. Arkia has a very small share in the Nakash portfolio. They have huge factories and businesses in the east," Berlowitz said. With no job, he and his business partner established a hydroponic farm, a small business that still operates today.
A hydroponic greenhouse?
"At the height of COVID, we sent 95% of the company's employees on unpaid leave and the company was at a standstill. I was sitting at home on the balcony with a colleague and we were out of a job. We didn't know where things were going, and we said that we are two entrepreneurs with management experience, let's check where the world is going in entrepreneurship. We heard from a friend that there are many entrepreneurs in the field of advanced agriculture. I grew up on my grandparent's farm with animals in a kind of village. I loved the land and the animals, I had two horses that were the love of my life and there were chickens. I thought I would spend my life in orchards."
"My life's dream was to be a farmer. I didn't believe that one day I would wear a suit. We decided to go for clean, advanced agriculture and set up a hydroponic greenhouse for green vegetables in Kfar Hess. When flights returned, I returned to Arkia. A professional team manages the farm during the week when I'm not there. On weekends, I visit and tend to it as something good for the soul, it fills me with good energy. It's like a throwback to the past, even though it's a very clean method of agriculture.
The Haifa Airport is ineffective
Few remember that Arkia was owned by El Al at the beginning. It was established in the 1950s as a domestic flight airline to transport passengers to Eilat. In the 1960s, it expanded its operations abroad and was privatized in the 1980s after suffering losses. The Borowitz family developed the company and expanded its operations abroad.
Today, the company operates 7% of all international flights departing from Tel Aviv, with five planes. It flies to 27 destinations, mainly nearby holiday destinations, including Cyprus and the Greek islands, Rome, Barcelona, Prague, Bucharest and more. Following the war, Arkia was forced to close its latest route to Sri Lanka.
Unlike its two Israeli competitors, El Al and Israir, Arkia is the only private Israeli airline whose employees own 26% of its shares. Unlike its competition, it operates on Shabbat. It employs 450 people, of which 55 are pilots, 70% of whom are Air Force veterans. "The Air Force is no longer the only supplier of pilots. Today, there are excellent pilots and aircrews who underwent civil commercial pilot training in the U.S. We also have a pilot who served in Givati," Berlowitz said with a smile.
What are the Israeli barriers in their competition with foreign airlines?
"The issue of security. Unlike foreign airlines, we, in addition to coordinating landing slots with the airport, have to be in sync with the Ofek unit of the Air Force, which is responsible for security abroad on behalf of the state. The definite number of security officials limits the number of flights I can authorize. If I operate a leased foreign plane with a foreign crew to Batumi, it is not obligated to Israeli security standards at the destination. If I have an Arkia flight and a chartered flight to the same destination, Arkia flight passengers will go through a longer process, while some airports' security standards do not fall short of Israeli security, and you can be satisfied with that.
"Another obstacle is that Israel does not have an alternative airfield. Contrary to the publications about the Haifa Airport, its runway cannot be extended, and a jet plane cannot take off from it, making it ineffective. The problem is that, according to all the forecasts, Ben-Gurion Airport will be closed by 2030 with 30 million annual passengers. At its peak in 2019, the airport reached 25 million passengers. Unfortunately, the country does not do well with decision-making and there is still no alternative airport two hours away. Transportation Minister Miri Regev says it's in the works, but there is no decision yet."
Arkia already operates flights to Ramon Airport near Eilat. Why not take international flights out of there?
"We tried. It's an amazing airport. But the experience made it clear that the Israeli public, most of whom live in the north and center, is not ready to travel 4-5 hours to fly abroad. We are considering equipping ourselves with wider planes so we can take more passengers."
Where do you stand in operating flights from Terminal 1 and why is this important to you?
"We have been fighting for the last few months to move our operations to Terminal 1 because today, due to the domestic flights to Eilat, we work in two terminals: 3 and 1, which are 3 km apart. This requires operating two teams at the same time. Terminal 1 is cheaper. The whole idea of low-cost airlines is to fly from cheaper terminals. The Israel Airport Authority opposes it, probably due to loss of revenue. Why should Ryanair fly from Terminal 1 and not us?"
Average increase of 15% on all flights
Since the war, the prices have skyrocketed everywhere. Any chance to return to $30 flights?
"I don't think the days of $40-$50 flights will ever return. It was a marketing gimmick. Even if today you see a $50 flight on Ryanair or EasyJet, it's a manipulative stimulus. In the end, the passenger won't pay less than $300 for a round trip because it only includes getting on a plane. When you add luggage, a seat, etc., there are always the freak passengers who are willing to settle on destinations and dates, but they don't represent the majority of the public who prefer to fly on fixed dates: holidays and vacations.
"Our costs are higher than those of the low-cost companies. We pay four times as much to our crew and the salaries at Arkia are about 15% of the cost of the flight. This year our prices are about 15% higher than a normal year because there are fewer flights. After October, assuming that the war ends, some of the low-cost companies will return, and the market price will return but will not be as low as it once was. I see that the basic price for all companies is relatively low if you take off with just your wallet. However, most companies are measured on the supplemental income. How much does the carry-on cost, the seat, the meal, etc. Last year, we increased our supplemental income by 50% by selling additional products such as hotels, attractions, etc.
What do you think about El Al's bounceback from nearly bankrupt to profitable?
"Flying all alone to North America for six months and charging up to $10,000 for a seat in business or up to $2,000 in coach is taking advantage of an opportunity. Arkia, even when it flew alone, did not charge 500% more per ticket. I know that since Delta and United Airlines returned to Israel, El Al's planes are no longer as full as before."
Do you think the Israeli public will remember this kindness when Turkish or other low-cost companies return one day with their low prices?
"I don't think we will be remembered years from now for rescuing reservists during the war. When the competition returns, price will be the main issue, I hope not only. When Turkish offers $50 less per seat, it is not certain that the passengers will remember it, but the decision-makers in Israel should help us face the competition."
How is this summer different in terms of Israelis' holiday habits and how much did the war affect it?
"The war changed everything. Turkey was wiped off the map. In a normal year, 2.5 million Israelis flew to Turkey. Half of the passengers had layovers there. The rest stayed in Turkey as it was the best destination in terms of value for money. In the summer season, there used to be about 20 daily flights to Turkey. The Israelis were not very significant to the Turks in terms of numbers but it hurt their hotels and commerce because the Israeli tourist spends more on hotels and shopping. Egypt's Sharm El Sheikh was also a popular destination and October 7 wiped that out in an instant.
"From what I see, the number of vacation bundles purchased has increased. Customers want to buy all the vacation components in one place. In addition, I operate a large call center for those who find it difficult to order online alone. That being said, the number of digital reservations has doubled. This means that Israelis have learned to order online."
You have been in Arkia your entire professional life. When your daughter tells you in the future that her friends change jobs every few years to be promoted or else they stay in place, what will you advise her?
"I don't see it as a bad thing to stay in one workplace, provided that you constantly advance within the organization. In the world of aviation, experience is a very important part of everyday life, as we saw in the crises we went through such as COVID and the war. Therefore, persistence in the industry brings an advantage. When I started as a flight attendant, people didn't travel as much as they do today, and the passengers were afraid of the plane and looked at me as a savior. That gave me a lot of experience. It's true that I've been involved in one industry for years, but it's not a monotonous place. It doesn't matter the size of the company, everything can affect it and profits are low. Building Arkia to be the largest tourism hub in Israel motivates me. In the end, Israelis have more trust in an Israeli company."
What is your favorite vacation destination?
"I'm a Paris and London person. I was in Dubai with the girls in a hotel on the beach and we really enjoyed it because of the exceptional level of service. The customer comes first. I was in South India and I really liked it. When you get there, you feel like you've arrived in a different world with an unfamiliar smell, and new people. I feel like I can breathe differently there, and I hope we will resume the flights."