DIN: El Al was the only airline flying to Israel for many months during the period and after October 7. Without El Al, it would have been impossible to fly between the US and Israel. If anything, El Al is owed appreciation and gratitude, not the law suit.
EL AL Israel Airlines is facing a potentially devastating class action lawsuit accusing the national carrier of exploiting wartime conditions to impose inflated ticket prices on Israeli and international passengers during the Iron Swords war. The lawsuit seeks a staggering 600 million shekels — roughly $169 million — in damages, alleging the airline abused its near-monopoly position after foreign carriers suspended flights to and from Israel following the Hamas massacre of October 7.
Israel Hayom reports that, filed in an Israeli court by attorney Ilan Vardnikov of the Pearl Cohen law firm, along with Dr. Tal Rotman and Adi Tzitron, the suit is supported by economic testimony from Prof. David Gilo, the former director of Israel’s Competition Authority. According to the petition, EL AL’s net profit surged to $554 million in 2024 — or $771 million when accounting for adjustments — compared to just $113 million in 2023. It was the airline’s most profitable year in over 15 years.
“EL AL was not satisfied with the enormous profits it generated legally during the state of emergency and war,” the suit argues. “It deliberately and knowingly chose to abuse its monopolistic power and harm consumers by inflating prices to unprecedented levels.”
Wartime Monopoly
The suit outlines how EL AL quickly consolidated market power after nearly all foreign airlines — including low-cost and major American and European carriers — halted or drastically reduced operations to Israel in the wake of the Hamas attacks. As a result, EL AL gained monopolistic control over 20 out of 24 examined flight routes and commanded market shares over 50% on many of them.
Israir Airlines corroborated this dynamic in its own filings, noting that “many flights by foreign companies to and from Israel were canceled until further notice,” leading to dramatically reduced competition.
Prices Soar as Costs Drop
While demand for flights spiked in 2024, the lawsuit claims EL AL took advantage of the crisis to impose unjustified fare increases. Prof. Gilo’s economic analysis reveals that EL AL’s operating costs decreased by 3% in 2024 compared to 2023 and by 11% compared to 2022. Meanwhile, ticket prices increased by an average of 14.3%, and profit margins per passenger kilometer soared to levels 15 times higher than before the war.
“There was no increase in EL AL’s costs justifying the increase in flight prices,” Gilo concluded. “Surplus revenues rolled directly to the profit line.”
Net profit margins per customer kilometer reached 28.5% in the first three quarters of 2024, nearly tripling from the previous year. With bonuses accounted for, the overall profit rate approached 35%. Globally, IATA data showed airline fares declining in 2024 — further reinforcing suspicions of local price manipulation.
Far Above Industry Norms
International comparisons were especially damning. EL AL’s 29.5% profit per passenger kilometer was nearly five times higher than the average of foreign airlines (6.1%). Its return on active capital reached 37.8% — quadruple its weighted cost of capital and far above industry norms.
According to the petition, these numbers reflect a “pricing strategy that served no legitimate economic purpose beyond profit maximization,” contributing nothing to consumers or the Israeli economy.
Regulators Limited
Although both the Israel Competition Authority and the Consumer Protection and Fair Trade Authority opened inquiries into EL AL’s wartime pricing, current laws limit their ability to force financial restitution. The lawsuit argues that the court must step in to impose consequences and ensure future deterrence.
“Compensating EL AL customers is just, fair, and required,” the suit states. “Without it, there can be no future deterrence against abuse of monopolistic market power during wartime, distress, and national crisis.”
EL AL Responds
In a brief statement, EL AL said it had not yet reviewed the petition. “After it is received, the company will study the petition and submit its response to the court as required,” the airline said. “It should be clarified that the company acted and acts by the law, including regarding flight prices.”
As Israel remains on high alert and foreign airlines still operate at reduced frequency, the lawsuit could have sweeping implications for consumer protection, wartime ethics, and the role of state-connected businesses during national emergencies.
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