El AL in France
Best in France Case Study
September 2004
Group BS2: Sylvie Hellmann, Astrid Enge, Andres Weil, Rick Banerjee
1
The Company

What is El Al’s business?
It is an Israeli airline linking Israel to several key
destinations around the world.

What are its key figures ?(world sales, France
sales, profits, market share etc. )





El Al global revenues 2004:
1 billion $
El Al global profit 2004:
67 million $
El Al France revenues:
40 million $
Passengers (scheduled and charter): 2 725 000 in 2002
When did El Al come to France?
El AL came to France in 1948, date of creation of Israeli
state
2
The Product

How many flights are there to France?
From France, flights are only to Tel Aviv: 3 flights a day from
Paris and 2 flights a day from Marseille.

Why did El Al decide to provide service to France
(and not elsewhere for example)?
Because of the importance of the Jewish community in
France.
3
The Product

Are there expansion/reduction plans for these product
lines?
North America
Over the past years El Al has expanded its schedule to 38
weekly flights between North America and Israel, its biggest
market, from 31 flights. El Al accounts for almost half the
country's air travel, the rest divided among Continental
Airlines Inc. and several other U.S. and European carriers.
However, nowadays no more modifications are forecasted
(good frequencies, time table and on-time schedule).
Western Europe
El Al plans to reopen offices in Scandinavia and further
wants to develop the Italian and Spanish market
4
El Al's clients

Who are the company's clients?
Jewish community, business men, tourists, pilgrims, nonJewish (2-3%) travelers.

What are their expectations? (in order of importance)
Security: Many controls and interviews, checking all bags
(pilots and technicians graduated from Israeli air force, each
flight carries an armed air marshal, the cockpits are sealed to
protect against attempted intrusions…)
Belonging: Feeling of already being in Israel as soon as they
board the plane (white jets with the blue Jewish stars
emblazoned on their tail)
Service: Kosher food, the flight crew speaks Hebrew, it is
forbidden to smoke on board
Price: Competitive with Air France.
5
El Al's clients

How will a French presence help or hurt the
company's ability to satisfy client demands?
French presence helps to satisfy clients’ demands: The ADP,
civil aviation, Ministry of Transport collectively helped to
bring the level of service requested by passengers by
working together with El Al. They ensured that the airports
provide adequate requirements requested by El Al as well
(especially for security).
Consequently, other airline companies are actually
reassured when El Al is at the airport because it is an
indication that the level of security is high (meeting El Al’s
extremely high standards).
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Why did El Al enter France?

Company approach to international growth
El Al’s policy is to always evaluate international
destinations in which demand is sufficiently high, and
flights will be profitable.
El Al is everywhere in Europe but recently closed some
offices in Scandinavia because of low demand. To answer
the demand in these countries, El Al proposed vouchers
through other companies to carry passengers towards
another destination in which El Al has a Sales office and
flights.
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Why did El Al enter France?

What other destinations did El Al consider?
For El Al, the political situation between Israel and Arabic
states affects selecting destinations, which is a unique
situation compared with other airlines.
It is expected once a peace agreement is signed, passenger
demand to Israel will certainly increase, resulting in
additional destinations and/or frequencies to existing ones.

Why was France a key target location?
The French Jewish community is the largest in Europe.
It is very well organized in terms of communication through
radio, newspapers, synagogues, consistory.
Paris is the most important destination after New York.
8
Company values

What are the core values of the company that may or
may not fit with perceived French values?
The core values that fit with perceived French values are:
 Quality of the service: to satisfy clients’ needs (by
providing the highest level of product and service)
 Security: at the airport, and during the flight
The core value that may not always fit with perceived French
values is:
 Too high level of security which can leave the impression
of being to aggressive, which is not something the French
are used to nor appreciate (too many security agents,
baggage checks, personal screening)

How did El Al manage to instill its values in the France
unit?
By building good relationships with local actors such as ADP,
civil aviation, other airline companies and explaining the needs
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for such decisions.
Business Constraints in France

What are the principle constraints the company foresaw
before going to France?
No specific constraints (they came in 1948)

Did they discover any others?


It is often difficult to reach a prompt consensus with French
representatives. Patience is needed as there is always a
hierarchy to deal with which delays prompt action.
Labor law constraints: 35 hour work week, as well as strict firing
and hiring laws.
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Business Constraints in France

Which are the worst constraints?
Labor rules are very inflexible.

How do these constraints differ with El Al’s other
locations?
Labor law is specific to each location, however, The US is an
example of a location with flexible labor laws, that are more
favorable to the employer.
11
Adapting to France

What kinds of adaptations did/is the company
make/making to its people management systems?
Recruitment: For managers, the recruitment process is
managed by the Tel Aviv head office. For employees, the hiring
process is specific to each country, but the final selection must
be confirmed by the head office.
In Israel, it is possible to stay in CDD for many years whereas in
France the maximum length is 18 months.
Compensation: Wages are adapted to comparable levels
according to standard of living (expenses etc.) in each country.
For example, wages in France are 40% higher than in Israel.
Management Development: To promote a manager, the head
office must agree to it, and valid reasons and proof of
performance must be presented to them. The final decision lies
in the head office and not in the country office.
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Adapting to France

Adaptations Cont’d
Workforce Planning: Each hiring or firing of employees
(including CDD, interim and interns) must be validated by the
head office.
Performance Appraisal: Each manager organizes an interview
with his subordinates to evaluate performance.
Motivation: If objectives fixed by the Head office are reached,
all countries receive a bonus. Therefore, it is a 100% fixed pay.
Bonuses are linked to profits of the group and are distributed
equally to all commercial agents.
Job Description and Assignment: Discussed with the head
office for top management and decided by local managers for
employees.
Communication Policies: Guidelines come from Tel Aviv head
office but each policy is adapted locally.
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Adapting to France

Adaptations Cont’d
International Transfers, Use of Expatriates: For each key
managerial position such as Finance Director, Regional
Director etc. people are sent as expatriates by Tel Aviv and
remain for 5 years. Apartments and specific advantages are
offered to them. If they do not achieve their goals, they are sent
back to Israel immediately.
Training: Proposed only for a specific mission. E.g.: to work as
a ‘chef d’escale’
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Key Costs

What are the key costs of operating in France that are
more or less than operating in other locations?
Startup Costs
Using an indexed reference, when launching a business in
Europe, there are significant startup cost discrepancies
among countries in the airline sector. It costs 100 units in
Amsterdam, 167 units in Barcelona, 200 units in Belgium and
223 units in Paris.
Any or all HR related costs (hiring, paying, training,
dismissing, etc.)
Hiring costs, dismissing costs, social security costs (congés
maladie, etc.), vacations costs (CP) do not exist or are much
lower in Israel.
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Key Costs

What are the key costs of operating in France that are
more or less than operating in other locations? Cont’d
Standard operating costs (real estate, travel, taxes, cultural
consultants, etc.)
 IT costs, work structure organization costs,
communication costs (phone, Internet), administrative
costs (printer, copiers)
 Real estate is particularly high in Paris and in the airport
area (600 euros per month per square meter)
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Key Cost Constraints

What are the key cost constraints of operating in
France that are more or less than operating in other
locations?
Communication constraints (language, infrastructure,
communication costs, etc.)
No specific communication constraints. All employees in
France speak 2 to 3 languages (English, French, Hebrew)
Integration of French managers into global organization
This is not an issue as French managers are not used as part
of the global organization.
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Key Benefits

What are the key benefits of being in France?
Primarily, increased market share and profitability
Product quality (defect rate, product cost, productivity, design,
customer image, etc.)
 Very good image of El Al worldwide.
 Tagline: ‘El Al Soaring above and beyond’.
 People who travel El Al have good reasons.
Revenue/profit (revenue/profit per French employee)
69 employees: Average profit is 2000 Euros per employee
Lowest is 1600 Euros and the highest is 3400 Euros
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Key Benefits

What are the key benefits of being in France? Cont’d
Location benefits (transport, time zone, quality of life, employee
satisfaction with France, etc.)
 El Al showcase location: Excellent Sales office location (35
Bd des Capucines 75002 Paris), but very high rent.
 Israeli workers feel at home as they work for El Al.
 Quality of life is adequate but wages are low in the airline
business even if higher in France compared to other
regions El Al is present.
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Key Benefits

What are the key benefits of being in France? Cont’d
Government assistance
El Al was privatized last December and therefore does not
receive any specific assistance from Israeli government. Nor do
they receive assistance from the French government.
Market Potential (product penetration or growth potential,
customer demands for cultural adaptation of product(s), launch
platform for other European countries, etc.)
Market potential depends a lot on political stability in this area.
Israel has strong potential and people are very enthusiastic
about discovering it, but are still frightened of attacks. These
days, market development is more towards South America. In
Europe, El Al wishes to re-open Scandinavia and Denmark
offices and boost sales in Spain and Italy.
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Essential Advice From El Al

What advice do you offer to other companies in this
sector concerning about France as a location?
Before going to France
Gather information about competitors and French regulations
Adapting to France
Develop good relationships with local contacts.
Future investments in Western Europe
 Development of e-tickets and a better political situation in
Israel may increase sales and therefore increase the
number of daily flights to Israel.
 Higher use of vouchers to and from destinations in which
EL Al has no office, to catch an El Al flight in a city they do
serve (similar to Alitalia’s policy).
21
We Thank

Manager 1: El Grabli Yoram, Financial Director
32 Bd des Capucines 75002 Paris, Email: yorame@elal.fr,
Telephone: 33 1 44 55 00 33

Manager 2: Azoulay Brigitte, Human Resources Manager
32 Bd des Capucines 75002 Paris, Email: brigittea@elal.fr,
Telephone: 33 1 44 55 00 07

Manager 3: Azoulai Guitta, Regional manager for Western
Europe and South America Assistant
32 Bd des Capucines 75002 Paris, Email: guittaa@elal.fr,
Telephone: 33 1 44 55 00 07
22
Bibliography

-
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References:
Documents provided by El Al
Interviews (joined in annex)
Articles from Bloomberg and from the Jewish exchange
newspaper
Websites
www.elal.co.il
www.iata.org
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Our Team

Sylvie Hellmann, Résidence Expansiel – 06 22 22 86 76

Astrid Enge, Résidence Expansiel – 06 66 83 32 65

Andres Weil, Résidence Expansiel – 06 61 55 54 83

Rick Banerjee, Résidence Expansiel – 06 61 82 45 67
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