Last week El Al (TASE: ELAL) published its financial statement for the first quarter of 2007, and revealed four claims against the airline. Two have already been approved as class actions. And no, none are about the food.
El Al's lawyers say in the report that they can't gauge how likely the claims are to succeed. Therefore, the airline has made no provisions to cover possible costs if it loses. However, if it loses the lot, the accountants note that the claims could cost El Al $176.2 million altogether. One has to conclude that if even a single one succeeds, the carrier is in for rough weather.
What aroused consumers from their torpor? The answers are: being forced to pay in foreign currency when buying tickets using credit cards - and being forced to pay a conversion fee; the high exchange rates that the airline chooses to use; a "passenger fee" at an exchange rate other than the representative rate; and the airline's habit of charging security fees even when it is not flying the lines itself.
What happens when you use credit cards to buy tickets
Not what you thought, possibly.
In March 2007, a complaint filed at the Tel Aviv District Court - which seeks permission to be a class action - claims that customers buying tickets directly from El Al, using credit cards, are required to pay in foreign currency rather than in shekels, and are therefore slammed by the credit card companies with a foreign currency conversion fee of 2% of the ticket price.
Charging in foreign currency rather than shekels breaks the Consumer Protection law, say the plaintiffs, and adding the conversion fee breaches the rule requiring the charge to consumers to be the total price. The company should bear the conversion fee, say the plaintiffs.
The plaintiff wants all conversion fees back, and wants the court to prohibit El Al from continuing to charge in foreign currency and roll the fees onto its customers.
High security charges on code-shared flights
In January this year, El Al was hit with an NIS 483 million class action motion in Jerusalem, over its $8 security charge per passenger - on flights that it is not even providing itself. Other airlines are, through code-sharing arrangements.
Among other things the plaintiffs accuse the airline of bad faith, and demand it repay them the security fee plus NIS 500 each as compensation.
That pesky exchange rate - I
This NIS 230 million claim dates from October 1998 and is being heard in Nazareth. The company overcharges for tickets bought through agents, through using exchange rates that are higher than the representative rate, say the plaintiffs.
In 2002 the court approved the motion as a class action, finding that El Al had sold tickets denominated in dollars, based on an exchange rate that was indeed higher than the official rate at the time.
El Al has asked for permission to appeal.
That pesky exchange rate - II
In September 1999, a Tel Aviv court started hearing an NIS 21.7 million claim against El Al and the Airports Authority, and Ophir Tours.
The plaintiff complained that Ophir had charged a 'passenger fee' at an inflated exchange rate, and that El Al and the regulator bore ultimate responsibility.
In 2002 the court approved it as a class action but then things got sticky. El Al asked for permission to appeal and in 2005, the Supreme Court frowned that the lower court had erred in the grounds for approving a class action. The plaintiff then asked to continue the lawsuit, based on consumer protection laws and the court has yet to hear her case.
El Al commented that out of the $176 million in motions, $116 million had not yet been approved as class actions.
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