‘Exploiting national tragedy’: El Al faces class action over war price gouging claims
Israel’s flag carrier is being sued for $600 million in a suit that alleges the airline’s exorbitant price hikes, which have generated massive profits, are immoral and illegal
Sharon Wrobel is a tech reporter for The Times of Israel
El Al Israel Airlines faces a class action lawsuit of almost $600 million for alleged price gouging and wartime profiteering, which accuses the national carrier of “exploiting an unprecedented national tragedy to generate huge profits at the expense of its customers.”
The class action lawsuit filed for approval in the Lod district court on Tuesday by plaintiff representative Ilan Verednikov alleges that El Al abused its monopolistic power on multiple flight routes to inflate ticket prices, in a “prohibited, immoral and illegal manner.”
With the outbreak of war with the Hamas terror group on October 7, 2023, El Al became a monopoly on most of the airline’s routes after many foreign carriers repeatedly canceled flight services to and from Israel due to heightened regional tensions.
“Price gouging of an essential and irreplaceable service during an emergency by a monopolist, whose goal is to fill the pockets of the monopoly, its employees and shareholders with billions of shekels, while thousands of Israeli civilians and soldiers are being murdered, killed, kidnapped, injured and wounded in the war, and the lives of many more are being destroyed and fundamentally undermined, is a despicable, unacceptable, illegal, unjust and immoral action,” Verednikov claimed in the lawsuit.
Verednikov is represented by Pearl Cohen law firm attorneys Tal Rotman and Adi Citron. The lawsuit is backed by an economic opinion by former Israel antitrust authority commissioner Prof. David Gilo, who found that El Al benefited from maintaining a monopoly on 20 out of 24 flight routes.
“El Al did not attain its monopolistic position because of its efforts, as a result of a competitive environment, investment in research and development, efficiency, or innovation,” Verednikov argued. “El Al deliberately and knowingly chose to abuse its monopolistic power and harm consumers by extorting prices to unprecedented levels.”
El Al said in response that it has not yet received the request for a class action lawsuit.
“Once received, the company will study the request and submit its response to the court as required,” El Al stated. “The company has acted and is acting in compliance with the provisions of the law, including flight prices.”
Air travel has been repeatedly shaken since the outbreak of war in October 2023, and amid spiking regional tensions. Major foreign airlines have repeatedly halted flight services to Israel over the past 20 months, leaving travelers from Tel Aviv’s Ben Gurion Airport almost entirely dependent on Israeli carriers El Al Israel Airlines, Israir, and Arkia, and a handful of other airlines, mostly from the Persian Gulf and Eastern Europe. Surplus demand and a scarce supply of flights have allowed El Al to charge exorbitant airfares during the war period.
As a result, El Al’s annual net profit in 2024 jumped nearly fivefold to a record of about $545 million. Amid public uproar and accusations of price gouging, El Al’s CEO Dina Ben Tal Ganancia said at the time that ticket prices rose “just 14%” on average per passenger in 2024.
“El Al’s net profit in 2024 is higher than the company’s total cumulative profits in the 15 years preceding the war,” it was argued in the lawsuit.
According to data presented in the lawsuit, during the six quarters after the outbreak of war in October 2023, average flight prices on various El Al routes soared by tens of percent, while the company’s expenses decreased.
“There has been no increase in El Al’s costs that would justify raising flight ticket prices,” Gilo, the former antitrust commissioner, stated. “On the contrary, costs decreased in 2024 by 3% compared to 2023 and by 11% compared to 2022.”
Gilo found that El Al’s “excess revenue rolled directly into the profit line.”
“Raising flight prices was not necessary to increase output or serve any other legitimate purpose, and could not bridge the gap between demand for flights and the depleted supply,” according to the lawsuit. “Price gouging did not contribute anything to consumers, nor did it benefit them or the Israeli economy.”
“It undermined social solidarity in Israel during a time of war; it substantially harmed the consumer’s freedom of movement to and from the country; and pushed out of the market customers who were not wealthy enough to afford El Al’s exorbitant prices.”
El Al shares are up more than 78 percent so far this year after a whopping 130% increase in 2024. CEO Ben Tal Ganancia enjoyed a salary increase of NIS 6.5 million ($1.8 million) in 2024, an increase of 10.2% year-on-year, according to data presented in the lawsuit. The salary cost of the next five senior executives rose by 24.2%, and the company’s employees were paid an unprecedented bonus of $103 million for the year 2024.
“El Al’s scandalous conduct during the war sparked a public outcry and gave rise to legislative amendments. The two relevant enforcement authorities — the Israel Competition Authority and the Israel Consumer Protection and Fair Trade Authority — began investigating El Al’s price increases after the outbreak of the war,” Verednikov noted. “However, they do not have the necessary legal tools to force El Al to return its excess profits to its customer base.”
Verednikov asked the court for an order to compensate the public for the damages caused to it by El Al.
“Compensation for El Al customers is just, fair and necessary, and without it, there can be no future deterrence against the abuse of monopolistic market power in times of war, distress, and national crisis,” he said.
The Times of Israel Community.