Air Sinai was incorporated in 1982 manily to operate scheduled services between Egypt and Israel (on routes previously flown by defunt Nefertiti Aviation) that was launched with the peace process. Egypt and Egyptair wanted to avoid controversy with other Arab countires, with no diplomatic relationship with Israel. Thus a "separate" airline other than Egyptair served Tel Aviv (TLV). A similar scenario is with KLM vis-à-vis China (Mainland and Taiwan).
Air Sinai is a wholly owned subsidiary of Egypt Air, operations commenced with a Boeing 737-200 "wet leased" from EgyptAir and new routes from Egypt's tourist destinations were introduced, (on occassions a Fokker F27 Friendship was operated). Air Sinai ceased as an independant operational entity in 2002 and operated as part of EgyptAir airline business, while its Air Sinai livley does not bear Egypt Air's markings.
In Feb 2011, Air Sinai halted its operations to Tel Aviv (TLV) and Egypt air removed TLV destination from its published route map