Easyjet already flies 10% of pax out of TLV so the LCCs are already here and I pray that they will start flying to more destinations than the 4 they already serve. I also don't see that Ryanair has chased any of the legacy carriers out of Europe with the possible exception of Air Lingus.
It is notable that on the TLV-LON route, that easyjet flies 2x per day, both LY and BA have added capacity on those routes in the last 6 months and haven't reduced fares.
I firmly believe that there is a tremendous pent-up demand for air travel to-from TLV and that opening the skies more will benefit the Israeli economy overall much more than any potential losses at the poorly managed El Al.