Israel has approved a state-backed insurance guarantee worth US$8 billion to support both domestic and foreign airlines operating in its airspace in an effort to stabilise aviation links amid an intensifying regional conflict.
The measure, endorsed by the Knesset Finance Committee on Monday, extends coverage to international carriers for the first time and is aimed at facilitating the eventual resumption of regular passenger and cargo flights once restrictions on Israeli airspace are lifted.
Since mid-June, operations at Ben Gurion Airport near Tel Aviv have been suspended for most departures and arrivals following missile attacks linked to a sharp escalation between Israel and Iran. Repatriation services for Israeli nationals and limited cargo flights have continued under special permissions.
The current round of hostilities was triggered by Israeli strikes on Iranian military infrastructure, prompting Tehran to respond with large-scale missile and drone attacks. The resultant security risks have led numerous foreign airlines to suspend services, with several indicating that flights will not resume until at least October.
The newly approved insurance facility, administered by the state-owned Inbal Insurance Company, is designed to provide war risk coverage where commercial policies are withdrawn or insufficient. The scheme builds upon earlier guarantees totalling $6 billion made available to Israeli airlines — El Al, Arkia, and Israir — following the outbreak of hostilities with Hamas in October 2023.
Michal Sheshinski, an official from the Accountant General’s office, said the expanded programme was critical to safeguarding Israel’s economic continuity. “We must ensure the movement of goods and the return of foreign operators to support both our security and commercial infrastructure,” she told the committee.
Underwriters had previously notified Israeli carriers of their right to terminate cover amid rising hostilities. Foreign carriers, which had sought parity in terms of risk coverage, are expected to benefit from the new framework once flying conditions normalise.
The state’s intervention is seen as a temporary measure to maintain essential air links and preserve trade flows until insurers are willing to reassume exposure. However, much depends on the stability of the recently brokered ceasefire between Israel and Iran, the terms of which have been contested by both parties within hours of its announcement.
While Iranian authorities have denied firing missiles since the ceasefire took effect, Israel's military reported intercepting incoming fire over the north of the country. The Israel Defense Forces said it would "respond with force" to what it termed a breach of the agreement.
Until a sustained de-escalation is achieved, government support may prove the only viable means of maintaining connectivity with Israel’s principal air hub.
