New Legislation Will Increase Ticket Prices

Airline executives respond to new law.

The new law forcing airlines to compensate passengers if flights are delayed or canceled will ultimately increase ticket prices in the long run, said industry sources this week.

"We may have to increase ticket prices since we'll have to account for potentially compensating passengers," said a senior executive at an Israeli airline. "It's too early to say how much this will affect prices. We'll have to wait and see how the law is implemented and how it affects companies financially."

David Mahlev, VP-marketing at Arkia Israel Airlines, said he hoped to see the law applied equally to all companies. Other laws, such as the Consumer Protection Law, are applied only to local and foreign airlines that have offices in Israel, and not to those that manage most of their operations online, such as low-cost airlines.

El Al Israel airlines stated in response that it was preparing to meet the terms of the law, but did not elaborate.

Foreign airlines with operations in Israel were more vehement about the negative repercussions they anticipated for airlines. Air Canada's local manager Ruth Ben Tzur said most of the measures were already being taken by airlines without any law mandating it. For instance, airlines already put up passengers in hotels if flights are delayed overnight, she noted. "This is an unpractical move toward strictness. Someone will have to bear the financial burden," she said.

"I don't think [the airlines] will be able to handle such large fines," she said. The new law isn't clear enough, she added. "What happens if a flight is delayed due to a technical malfunction on the runway? Is this considered an act of God?" She also took issue with the fact that the law applies to flights to Israel as well as from Israel. "Is this not an illegal intervention in other countries' laws?" she asked, adding, "The airlines will survive, but in the long term this will only cause damage."

British Airways' local manager Yael Katan countered that the new law has brought Israel in line with European standards. "As an European airline, British Airways followed European laws, which are very similar to the new Israeli law. It would be appropriate for Israel to enforce European [compensation] standards," she added.