Airlines not rushing back to Israel despite impending law change

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Many foreign airlines made reduced compensation for delayed and canceled flights the condition for their return, but the security situation appears to be weighing more.

After nine months and five sessions on the matter, last week the Knesset Economic Affairs Committee voted in favor of an amendment to the Aviation Services Law, which protects travelers’ rights in the event that a flight is delayed or canceled. The amendment eases the terms for compensation that airlines must provide to passengers whose flights are canceled. Foreign airlines have been demanding the change because of the frequent need to cancel flights during the war and the high cost of providing passengers with alternative flights on different airlines.

Despite the positive signal to the foreign airlines that their demands are being met, there has been little response on their part so far. Aviation industry sources say that there is almost no contact with foreign airlines with a view to them resuming services to Israel. At the same time, the pace of events in Israel, especially the missile attacks from Yemen, creates a new-old challenge for the airlines. A plane of Greek airline Aegean had to make a stop in Larnaca on its way to Israel because of sirens warning of an incoming missile.

At any rate, the foreign airlines are not rushing back, despite the fact that many of them stated that the amendment to the law was their condition for doing so. Air France, for example, which was one of the airlines that openly backed the amendment, announced that its flights to Israel would be suspended for a further week. Adv. Shirly Kazir, who heads the Aviation & Maritime and Hotels & Tourism practices at law firm FBC, and who represents several airlines, among them British Airways, said that 50,000 seats could be added as soon as this month if the amendment finally became law. The test for the airlines should come very soon, after the amendment is given second and third readings in the Knesset, generally a technical procedure.

Ryanair, which openly supported the amendment, after revealing that it had had to pay passengers compensation amounting to almost €4 million, has said that the amendment will not be enough to ensure its return to Israel without the reopening of Terminal 1 at Ben Gurion Airport to international flights.

Before the war, some 90 foreign airlines operated at Ben Gurion Airport, but currently there are only 26. After the ceasefire in Lebanon came into force, Air Seychelles announced that it would be returning, and by the end of this week it will become airline number 27. Its return is welcome, but it operates only a few flights to a small number of destinations, so the effect on the sector is minimal.

The only certainty: Consumers will be hit

If the airlines do not return, passengers will be liable to find themselves in a situation in which flights are cancelled or substantially delayed, and they are not entitled to any financial compensation beyond the cost of their tickets, and will have to bear what can be high costs arising from the cancellation of their flights, without any increase in competition that might bring down fares.

No date for a vote on the amendment to the Aviation Services Law in the Knesset plenum has yet been set, but in any case, whether or not the amendment leads to all the foreign airlines returning will depend on the security situation.

In any event, the US airlines, or at least some of them, are not expected to be back in Israel any time soon. In the case of long-haul flights such as between Israel and North America, changes in schedules and diverting planes from one route to another are complex matters that take time. Economic Affairs Committee chairperson MK David Bitan said that he would bring the bill forward for final approval by the Knesset plenum only after he had made sure that the government was abiding by its commitment to indemnify airlines that raised the number of their flights to North America, if they added two weekly flights. This mainly means Arkia and Israir, for which the move involves considerable risk.

The bill provides for state to cover 50% of operational losses to airlines in the event of flight cancellations for security reasons.

Published by Globes, Israel business news - en.globes.co.il - on January 6, 2025.

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