Israel’s Arkia Airlines, a key player in the country’s leisure and short-haul market, is on the brink of a major ownership shakeup. Following a bruising stretch of war-related losses, legal battles, and intensifying competition on both domestic and long-haul routes, the airline’s controlling shareholders are in advanced talks with American investor Elliot Zemel over a deal that could see him take control of the carrier. The prospective transaction comes at a critical juncture for Arkia, as it seeks fresh capital, a sustainable strategy for its expanding international network, and a path through Israel’s volatile aviation landscape.

Negotiations for Control: Who Is Buying Arkia and Why Now

According to recent Israeli business media reports, the Nakash brothers, who currently control Arkia, are in advanced negotiations to sell a controlling stake in the airline to Elliot Zemel, a US-based lawyer and investor. The discussions, led by businessman Avi Nakash, are aimed at transferring control of one of Israel’s most recognizable leisure airlines at a time when its financial situation is fragile and its strategic options are narrowing. While no binding agreement has yet been signed, the tone of the talks has been described as serious and focused on a full change of control rather than a minority investment.

Estimates in local media value Arkia at around 50 million dollars, reflecting both the company’s challenges and its strategic potential. That valuation is modest for an airline with a well-known brand, a European and transatlantic presence, and strong name recognition among Israeli holidaymakers. However, it also underscores the depth of the financial pressures Arkia has endured in recent years, from soaring security costs and war disruptions to a bruising fare war and legal disputes with low cost rival Wizz Air.

Zemel’s interest is seen as part of a broader trend of foreign investors targeting distressed but strategically important aviation assets. Israeli carriers benefit from captive demand on core routes, a loyal outbound tourism base, and unique positioning on key corridors between Europe, the Middle East, and North America. For a determined investor willing to navigate regulatory constraints and operational risk, Arkia offers the chance to reshape a mid-sized airline at a discounted entry price.

The Investor: Elliot Zemel’s Unusual Path to the Cockpit

Elliot Zemel is not a household name in global aviation, and unlike many airline buyers he has no apparent background running airlines or travel companies. Instead, he is a lawyer by training, with a doctorate in business law, who has built his career in healthcare law, regulated enterprises, and investment management. He serves as a managing member of Koze Investment Group and, in 2025, joined the board of CannaPharmaRX, a US-based pharmaceutical cannabis company traded over the counter.

Zemel’s track record includes ownership and operational involvement in long term care facilities in California. He was previously a co owner and operator of the South Pasadena Care Center, a nursing home that later became the subject of civil lawsuits alleging failures in resident care. Those cases, while not directly tied to aviation, raise questions about how his management style and risk appetite might translate into an airline environment that is both safety critical and highly regulated.

For Arkia, the lack of aviation experience cuts both ways. On one hand, it heightens concerns among staff, regulators, and passengers about whether a new controlling shareholder will grasp the operational, safety, and reputational stakes involved in airline management. On the other, Zemel’s background in highly regulated, high liability sectors could prove relevant as he navigates Israel’s strict aviation security regime, complex consumer protection laws, and close governmental scrutiny of national airlines.

Financial Crisis at Arkia: War Losses and Mounting Costs

The backdrop to the ownership talks is a sharp deterioration in Arkia’s financial position over the past two years. The multi front conflict affecting Israel since late 2023 has repeatedly disrupted air travel, forced schedule overhauls, and triggered expensive rescue operations to bring Israelis home from regional destinations. Local reports indicate that Arkia has suffered tens of millions of dollars in losses during the war period alone, a significant sum for a carrier of its size.

Security costs have also spiraled. Domestic Israeli airlines shoulder a uniquely heavy financial burden for security, with some industry analyses estimating such expenses can approach 40 percent of operating budgets. Government support has not fully kept pace with rising costs, forcing carriers like Arkia to trim networks, particularly on marginal domestic routes such as Tel Aviv to Eilat. In March 2025, Arkia’s decision to cut routes to Eilat by roughly 40 percent underscored how fragile the economics of domestic flying have become in the country’s current security climate.

At the same time, Arkia has faced public criticism and legal challenges over its pricing and passenger treatment during periods of crisis. In mid 2025, the airline, along with Air Haifa, became the target of a proposed class action lawsuit alleging that it refunded canceled tickets to passengers stranded abroad during the brief war with Iran, only to resell seats home at much higher prices. Around the same time, members of the Knesset’s Economic Affairs Committee accused Arkia and Israir of “extorting the public” through steep price hikes on urgent repatriation flights. Those accusations have damaged Arkia’s reputation and added to regulatory and legal risk at a time when it can ill afford distractions.

Strategic Transformation: From Eilat Shuttle to Transatlantic Player

Even as Arkia has battled mounting costs and reputational challenges, it has also attempted to reinvent itself strategically. For decades, the airline was best known for domestic flights to Eilat and short haul leisure services to European sun destinations. However, in early 2025, Arkia took a bold step into the long haul market by launching direct flights from Tel Aviv to New York’s John F. Kennedy International Airport, using wet leased widebody aircraft.

Arkia’s entry into the Tel Aviv to New York market broke the long standing near monopoly of El Al and swiftly reshaped pricing on one of Israel’s most important air corridors. With roundtrip fares starting significantly below El Al’s, Arkia positioned itself as a more affordable alternative for Israelis and US based travelers. For a time, it was one of the only options on the route, as US carriers were slow to restore services to Tel Aviv amid security concerns and insurance constraints.

By late 2025, Arkia had sought approval from US regulators to continue its New York flights at least until October 2026, relying on wet leasers such as Bulgaria based GullivAir and Portugal’s Hi Fly for Airbus A330 capacity. Those filings underline the airline’s ambition to be more than a regional leisure carrier and to lock in a share of lucrative transatlantic traffic. Yet the long haul strategy also adds complexity, capital needs, and exposure to fuel price volatility, all of which are now central to any potential buyer’s investment thesis.

A key tension point in Arkia’s recent history has been its fierce opposition to Hungarian low cost airline Wizz Air’s efforts to establish a hub at Tel Aviv’s Ben Gurion Airport. Wizz Air, already a major player in the Israeli outbound market via point to point routes, has signaled plans to base aircraft and crews in Israel, a move that domestic carriers see as an existential threat to their business models.

Arkia’s chief executive, Oz Berlowitz, has been one of the most vocal critics of Wizz Air’s Israeli ambitions. In recent comments to local media, he argued that allowing a foreign low cost carrier to base operations domestically amounted to letting an outside airline “take over” the local market. Arkia, along with Israir, has pledged to fight the move in court and through regulatory channels, seeking to preserve the limited advantages that domestic airlines still enjoy in terms of brand loyalty and schedule flexibility.

The impending arrival of a full scale Wizz Air hub has profound implications for Arkia’s future strategy and for any incoming owner. On core European leisure routes, Wizz Air’s much lower cost base gives it significant room to undercut fares while still making a profit. Arkia, with higher labor and security costs, will struggle to match those prices without eroding margins further. That dynamic may push the airline to double down on niche routes, charter work, and partnerships, or to lean even more heavily into long haul and connecting traffic where pure price competition is less decisive.

Regulatory Hurdles: Foreign Ownership and Israeli Interests

Any transfer of control of Arkia to an American investor must navigate strict Israeli rules on foreign ownership of airlines. As in many countries, regulators limit the proportion of an airline’s shares and voting rights that can be held by non Israeli citizens in order to maintain national control over scheduled air services, ensure compliance with bilateral air service agreements, and preserve leverage over strategic transport assets during crises.

Reports in Israeli media indicate that the Nakash Zemel transaction will require the participation of Israeli investors alongside Zemel’s group to satisfy those restrictions. That likely means a layered ownership structure in which Zemel secures effective control via agreements and governance rights, even if Israeli shareholders technically hold a majority of voting stock. Regulatory authorities will carefully scrutinize such arrangements to ensure that real decision making power and oversight remain in Israeli hands where required by law.

In addition, any new controlling shareholder will inherit Arkia’s existing obligations under Israeli consumer protection regulations, aviation liability statutes, and security protocols. With lawmakers already wary of public anger over wartime pricing and cash strapped carriers lobbying for relief, the political climate is sensitive. Zemel and his advisors can expect hearings, conditions, and ongoing oversight as the Civil Aviation Authority and the Ministry of Transport weigh the broader national interest in a stable, competitive airline sector.

What Zemel’s Takeover Could Mean for Travelers and the Market

For travelers, the prospect of new ownership at Arkia raises immediate questions about fares, routes, and service quality. A well capitalized investor with a long term vision could stabilize the airline’s finances, secure more efficient aircraft, and invest in product upgrades that make Arkia a more compelling option versus foreign low cost rivals and Israel’s flag carrier El Al. On high profile routes such as Tel Aviv to New York, that could mean continued competition on price and schedule, benefiting both Israeli leisure travelers and the country’s sizable diaspora in the United States.

Conversely, if the new owner focuses above all on rapid cost cutting and short term returns, the result could be retrenchment: fewer domestic flights, trimmed seasonal schedules, and reduced service to secondary European destinations. Already, Arkia’s cuts to Eilat have raised concerns among hoteliers and tourism officials about reduced access to the Red Sea resort, and further cutbacks could hit regional economies dependent on air connectivity. How Zemel balances profit motives against Arkia’s quasi public role as a connector of peripheral communities will be closely watched.

Within Israel’s airline industry, a Zemel led Arkia could also reshuffle alliances and rivalries. A more aggressively expansion minded Arkia might partner with US or European carriers for feed and code sharing, reinforcing its long haul play. It might also seek deeper cooperation or even consolidation with Israir, another privately owned carrier that is expanding its own long haul ambitions. The one constant is that El Al, Arkia, and Israir are all bracing for a more competitive environment as foreign low cost and full service airlines ramp up Israel operations in the coming years.

Outlook: A High Risk Bet on Israel’s Aviation Future

As of early February 2026, the negotiations between the Nakash brothers and Elliot Zemel remain in progress, with no guarantee of a completed deal. Yet the fact that talks have advanced as far as they have underlines the urgency of Arkia’s situation and the willingness of its current owners to hand over the reins to a new player. The window for securing fresh capital and a credible transformation plan is narrowing as war related disruptions, legal challenges, and competitive pressures continue to weigh on the airline.

For Zemel, Arkia represents both a risk and an opportunity. He would be stepping into a volatile regional market, assuming control of a carrier with a mixed public image, and confronting a wave of low cost competition even as he tries to extend Arkia’s footprint in the United States. Success will require more than financial engineering. It will demand a clear strategic vision, stable management, and a careful balancing of cost control with investments that improve reliability and customer trust.

For Israel’s travelers and tourism industry, much is at stake. Arkia is more than just another airline: it is a bridge between central Israel and its resort towns, a price checking force on European holiday routes, and a symbol of national resilience each time it launches new long haul services during a turbulent period. Whether under the stewardship of the Nakash family or a new American led ownership group, its next chapter will help shape how Israelis move, vacation, and connect with the wider world in the years ahead.