Criticism of the soaring flight prices and the massive profits reaped by El Al reached the courts on Wednesday, as a class action lawsuit was filed against the national airline, alleging it “exploited an unprecedented national tragedy to generate super-profits at the expense of its customers.”
In the lawsuit, submitted by Attorney Ilan Verdnikov to the Lod District Court, the plaintiffs claim: “The 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 its shareholders with billions of shekels – at a time when thousands of Israeli citizens and soldiers are being murdered, killed, kidnapped, affected, and injured in war, and the lives of many others are being destroyed and undermined from the foundations – is a low, defective, illegal, unjust, and immoral action worthy of all condemnation”.
The company allegedly “became a monopoly on most of the air routes it operates, with the outbreak of the war on October 7, 2023, and it abused its position to inflate flight prices in an illegal, unethical, and illegal manner.”
From the data included in the lawsuit, it appears that in 2024, El Al recorded an extraordinary net profit of about $554 million, and in fact, even $771 million after netting special grants and accounting tax expenses. An unprecedented leap compared to a profit of only $113 million in 2023. “El Al’s net profit in 2024 is higher than the company’s total accumulated profits for the 15 years preceding the war,” the petition stated. It added that the damages caused to its customers “due to El Al’s flight price surges estimated at about $483 million.In addition, they suffered non-monetary damage of about $115 million.”
According to the data presented, during the six quarters following the outbreak of the war, the average prices of flights on various routes increased by dozens of percentages, while El Al’s expenses decreased. As a result, the profit margins per passenger kilometer flown increased 15 times. After eliminating an exceptional grant of $103 million paid to employees, the profit rate reached 35 percent.
The request is supported by an extensive economic opinion of Professor David Gilo, formerly the Antitrust Commissioner. Gilo found that in 20 out of 24 flight routes examined, El Al became a clear monopoly, sometimes with a market share far over 50 percent. According to him, “There was no rise in El Al’s costs to justify the increased flight prices. On the contrary, costs fell in 2024 by 3 percent compared to 2023 and by 11 percent compared to 2022.” Gilo unequivocally determined that “The excess revenues were directly channeled to the profit line,” noting that net profit margins per flight km of a customer reached 28.5 percent in the first three quarters of 2024, a surge of about 180 percent compared to the year before the war.
During the COVID pandemic, Israel’s government funneled millions to El Al to save it from bankruptcy.
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