Israel’s national flag carrier, El Al Airlines, is facing a record-breaking fine over price gouging allegations during the outset of the Gaza conflict when foreign carriers suspended flights to the country, leaving El Al with a monopoly on many routes.
The Israel Competition Authority has been investigating El Al over price hike allegations for more than a year, and on Sunday, it told the airline that it intends to levy the biggest penalty it is legally allowed to impose – a fine of around US $39 million.
Within days of the October 7, 2023, Hamas-led terror attack on Israel, the competition watchdog contacted El Al and warned it to avoid exploiting travelers who had been left stranded around the world as foreign carriers grounded flights in response to the developing security situation.
In the following months, however, regulators started to receive complaint after complaint from frustrated travelers who accused El Al of hiking airfares. Passengers, however, had little option but to pay up if they wanted to return to Israel.
Regulators opened an investigation into El Al’s pricing in January 2024 and sought a vast amount of data from the airline covering millions of tickets sold during the war, and compared this to pricing in the preceding period.
El Al executives were then summoned to the competition watchdog where they were told they had been setting airfares at an “excessive price level that was the result of an abuse of monopolistic power that stemmed from circumstances that prevailed after the October coup, and not for any other legitimate reason.”
“The investigations show that the proportion of passengers flying to and from Israel via El Al on the eve of October 7th was approximately 20%, and within a few days exceeded 70% of all passengers,” the watchdog explained on Sunday.
On average, air fares rose by 16%, but in some cases, prices spiked by as much as 31%.
The competition authority added: “Freedom of movement to enter and exit Israel is a fundamental right. Its realization became extremely important in the circumstances of the war, even more so in the first months of the war.”
“The exceptional security situation caused extreme situations among the traveling public.”
In response to the regulator’s findings, El Al says that an average price rise of 16% does not, in its opinion, constitute “excessive pricing” and that it will challenge the determination at a full hearing.
During long periods in which foreign carriers suspended all of their flights to Israel, El Al portrayed itself as a beacon of national pride, maintaining an airbridge to the country while international carriers abandoned passengers.
El Al has used this argument to argue that Hungarian budget carrier Wizz Air should not be allowed to open a case in Israel, because if the security situation were to deteriorate again, Wizz Air could move its planes out of the country and leave passengers stranded.
