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Representatives of foreign airlines in Israel responded harshly yesterday to reports of El Al's campaign to offer $500 discounts to travelers to New York this summer who cancel their flights on other airlines and switch to El Al.

"If the facts are correct, this is very serious," said Avi Friedman, the head of Israel's panel of foreign airlines. "This is no way to conduct business, and it shows panic. I have been in the aviation business for 40 years and I have never seen such a thing. It seems the panel will have to meet and discuss the matter."

TheMarker yesterday revealed that El Al was secretly offering travel agents very cheap tickets to New York intended only for passengers who could prove they had canceled flights on foreign airlines and booked on El Al.

"It is hard to believe that a respectable airline would issue such instructions in writing," said Friedman. He added that if it is true, foreign airlines will have to retaliate, and consumers will lose their faith in the industry and its prices.

One senior executive at a major travel agency said that "TheMarker's revelations are only the tip of the iceberg on El Al's behavior. They have lost their senses at the airline due to an incorrect pricing policy. Their expectations were for a rush for seats this summer, which led to very high prices. In actuality, the airplanes are empty and El Al is taking this step in desperation."

Other executives reported additional steps and discounts by El Al, such as bonuses for travel agents who switch Israeli passengers to El Al, on top of the regular commission.

Others said the discounts applied to other destinations as well as New York. The discounts on tickets to Europe are $300, compared with the $500 to New York. Among European destinations included are Athens, Rome, Prague, Budapest, Milan, Warsaw, Zurich, Geneva, Frankfurt, Munich and Berlin.

The Antitrust Authority was careful in discussing El Al's actions. They actually view El Al's discounts on the New York route as a positive sign of competition that could be good for consumers. But the Authority was also wary of further El Al actions that might harm competition.

El Al responded: "El Al, like any commercial entity, has offered and will offer attractive deals to agents and group travel organizers for their customers and the customers of all airlines."

El Al CEO Haim Romano said yesterday that the airline would continue to adapt its prices to supply and demand in a planned and appropriate manner.

Romano said the company has been acting over the past two years to contend with rising fuel prices by improving its revenues by filling its planes, and was proud of itscustomers' loyalty to the airline.