Why is the Airport in Haifa doing this?
First, it hurts relations between Israel and Cyprus. Tourism is very important to Cyprus, and Israelis are visiting the country in greater numbers.
Second, it hurts the population around Haifa, who could use the airport for flights to Cyprus or Greece without having to go to Ben Gurion.
Third, it hurts Ben Gurion Airport, as this forces passengers to to to TLV. Ben Gurion is already almost full.
Tus Airways is Cypriot, not Israeli, but it saw a market in Haifa. The airport at Megiddo won't open for many years, and if Haifa can be used for passengers instead of Ben Gurion, that is good for everybody. And even with Megiddo, it would be a good idea for Haifa to extend its runway to at least 1,500 meters (it is now 1,318m) so it could at least handle E-190s and CS-100s.