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August 30, 2015

American Airlines denies Arab pressure made it drop Israel route

Israeli newspaper Haaretz quotes anonymous source saying decision was political

American Airlines has denied charges that it dropped its service from Philadelphia to Tel Aviv, Israel in order to increase ties with Arab carriers.

"The route was cancelled solely because of financial performance," said spokesperson Casey Norton to "It hasn't turned a profit since it started in 2009."

Related story: American Airlines cuts flights from Philadelphia to Tel Aviv

Citing an anonymous source, Israeli newspaper Haaretz reported last week that American Airlines chose to drop the Philadelphia-Tel Aviv route not because of profitability concerns but because of pressure from airlines based in majority-Muslim countries. 

American is part of the OneWorld global alliance of airline carriers, whose members include Qatar Airways, Royal Jordanian and Malaysia Airlines. An unnamed industry source told Haaretz that these airlines pressured American to cut the route.

"Profitability wasn't a one would have operated a money-losing route for so long," the source told Haaretz.

Haaretz also reported that "the airlines’ Israeli office was given no advanced warnings and learned about the decision from the media."

Around 95,000 passengers have flown on the route so far this year, up 2.7 percent from 2014, according to the Israel Airport Authority. 

However, the company said that full flights do not always guarantee profitability.

"Load factor is not the only way, nor the best way to judge a route’s overall performance,” spokesperson Victoria Lupica told the Philadelphia Business Journal. “We also look at overall demand and the fares customers are willing to pay on that route. In the case of PHL-TLV, a number of factors have resulted in poor financial performance.”

American Airlines, the world's largest carrier, said that the company lost $20 million on the route last year alone.

The Jewish Exponent quoted a letter from Rhett Workman, managing director of government and state affairs at American Airlines, to an angry customer:

While we can maintain losses for a period of time, continued loss without the possibility of profit is detrimental to our shareholders and the company. Appreciating Israel’s place in the world and the challenges it faces, we were adamant in all our communications that this was a financial decision and we were not politically pressured in any way. I realize on your flights you did not see empty seats, but that is not always indicative of the profitability of a route. Unfortunately, this is a situation that what one sees is not the fiscal reality.

American Airlines will continue to fly to Israel, but with layovers in European cities. Its final non-stop flight from Philadelphia will depart in early January.