Disgruntled Air Travelers Sue El Al for $176.2 Million

Four consumer suits have been filed against El Al, according to the financial reports the company made public last week. Of the four, two have been approved as class actions and the more recent pair were submitted with a request to be approved as class actions, arguing that the company has violated the Consumer Protection Law.

El Al's accountants called special attention in the reports to the legal proceedings it is facing. El Al's legal counsel states it cannot assess the likelihood of the suits's being won or or approved as class action, and therefore no provisions were set to account for these claims. The four claims together total of $176.2 million. So if even one of them is won, the company may find itself in a financial pickle.

What angers the consumers? Purchasing tickets in foreign currency and being charged a currency conversion fee, high exchange rates on ticket prices, paying airport tax in an exchange rate different from the representative rate and being charged for security on flights El Al handles through other airlines.

The most recent suit against El Al was filed in March of this year, together with a request to be approved as class action. The plaintiffs argue that customers who buy tickets directly from El Al with their credit cards are asked to pay in foreign currency rather than in shekels, resulting in an added currency conversion fee paid to the credit card companies of 2 percent of the ticket's price.

The suit argues that charging in foreign currency instead of shekels constitutes a violation of the Consumer Protection Law; that imposing a conversion fee violates the obligation to advertise an "all-included price" and that the company should bear the conversion fees.

The court is asked to instruct the company to compensate each member of the group for all of the allegedly illegally charged conversion fees and to forbid El Al from charging future customers in foreign currency and rolling the conversion fees onto them.

Another claim seeking approved as a class-action suit - NIS 483.4 million - was submitted in January of this year in the Jerusalem District Court. At the heart of this suit is a security fee of $8 per flight segment that Al charged passengers on flights it handled through other airlines as part of code-sharing agreements.

The plaintiffs argue this fee constitutes a "deception of the consumer, an agreement violation and deliberate unlawful profit-making," since the security services on these flights are of a different level and quality from the ones offered by El Al.

The plaintiffs ask the court to instruct El Al to pay each passenger included in the claim a sum of $8, and an additional compensation of NIS 500 for distress.

Another claim was submitted on October 1998 in the Nazareth District Court, for a total of NIS 230.4 million. It argues that travel agents overcharged their customers on flight tickets by using an exchange rate higher than the representative one.

In 2002 the court approved the claim as a class action in terms of the Consumer Protection Law. The court ruled that El Al sold, via travel agents, flight tickets priced in dollars, and used a higher dollar exchange rate than was permissible.

El Al submitted a request to appeal in the Supreme Court. Regarding this case as well, the company's financial reports indicate that management, which relied on professional legal counsel, said it could not assess the outcome of the proceedings at this point.

In September 1999 a suit for NIS 21.7 million - against El Al, the Israel Airports Authority and Ophir Tours travel agency - was submitted in the Tel Aviv District Court. The plaintiff argues that "the travel agent charged her a passenger tax according to an exchange rate that was higher than the representative rate, and and responsibility for the agent's actions in this matter also lies with the company."

In 2002 the court approved the request to recognize the claim as a class action, but El Al appealed to the Supreme Court, which, in 2005, ruled that the regulation the claim relies on is not sufficient for it to be approved as class-action suit.

Since then the plaintiff asked to continue the proceedings based on the Consumer Protection Law. The court has yet to decide on this matter.

El Al's response: "Of the $176.2 million total of class-action claims, $116 million has yet to be recognized as class actions. Other than that, the company does not supply information that is not included in its financial reports."