Flight prices have risen significantly since the Israel-Hamas War began, and El Al Israel Airlines has been at the center of criticism for just that. On Tuesday, a class action lawsuit was filed against El Al in the Lod District Court, accusing the airline of engaging in price gouging during the national emergency that followed the outbreak on October 7, 2023.
The suit, spearheaded by attorney Ilan Verednikov and represented by Tal Rotman and Adi Zitron from the Perl Cohen law firm, claims that El Al allegedly exploited its monopolistic position to unjustly increase flight prices at the expense of its customers. The suit is for over NIS 2.5 million.
The lawsuit argues that El Al, which, after most foreign airlines ceased operations due to the war, became the dominant carrier on many flight routes, used this monopoly status to raise prices. The suit describes this conduct as both immoral and illegal – El Al allegedly taking advantage of a national tragedy to generate massive profits.
El Al said on Wednesday that the lawsuit had not yet been confirmed as received, and that once the airline’s legal team has the suit, it will submit its response to the court, per regulations.
“It should be emphasized that the company complied and continues to comply with judicial instructions, including relating to flight prices,” El Al added.
The class action claims that by the end of the first quarter of 2023, El Al’s pricing practices caused damages estimated at approximately NIS 600 million, with the financial harm racking up as the war progressed.
Prof. David Gilo, a former commissioner for competition, provided an economic analysis to support the claims.
Gilo said that in 20 out of 24 examined routes, El Al held a dominant market share. He concluded that the price hikes were not justified by any rise in operational costs. In fact, El Al’s costs decreased during the period, while its profits soared, he explained.
The class action highlights what it says was El Al’s extraordinary financial performance during the wartime period, with a reported net profit of approximately $554 million in 2024, compared to $113 million in 2023.
The lawsuit states that this profit surge was driven by price increases on key flight routes. Examining average ticket prices and how they changed over the course of 2023-2024, the suit explains that the rise in prices coincided with the passage of time. The 2024 calendar year saw a 14.2% increase in overall prices, it shows.
El Al CEO Dina Ben Tal Ganancia told Globes in November, “The criticism is understandable. We raised fares much less than everyone thinks (El Al says there has been a 16% rise in average revenue per passenger). But the alternatives, the entire world of low-cost, for example, does not currently exist at Ben-Gurion Airport. People willing to fly at odd hours, or receive less good service, cannot do so now.”
The suit noted that the company’s stock value rose, benefiting its executives and stakeholders. Ben Tal Ganancia received a 10.2% increase in her salary, while other executives enjoyed similar raises. Additionally, El Al’s employees received an unprecedented $103 million in bonuses, the suit charged.
Damages to the consumer's pocket and solidarity
Verednikov argued that these actions not only hurt consumers but also undermine social solidarity during a time of crisis. He called on the court to order compensation for the affected passengers, stressing that it is vital to deter similar abuses of monopolistic power in the future, particularly in times of national distress.
The lawsuit has already sparked public outrage, and authorities such as the Competition Authority and the Consumer Protection and Fair Trade Authority have begun investigating El Al’s conduct, though they are limited in their ability to secure restitution for consumers.
Verednikov is pushing for judicial intervention to ensure that the excess profits made by the airline are returned to the public.
Sarah Ben-Nun contributed to this report.