Crisis in Israel’s Aviation Industry Deepens as Foreign Airlines Cancel Flights Amid Uncertainty

The ongoing security situation in Israel has led to a sharp decline in international flights, with major foreign airlines announcing daily cancellations to and from the country. Notable aviation giants such as American Airlines, the Greek carrier Aegean Airlines, and the German Lufthansa Group have all decided to halt services to Israel for the foreseeable future. Air France has extended its suspension of all flights until November 12, while American Airlines has gone a step further, announcing that it will not fly to Israel until at least September 2025.

While the airlines cite the instability and uncertainty caused by the security situation, the primary concern lies with Israel’s Aviation Services Law, which imposes strict compensation requirements on carriers for canceled or delayed flights.

The Legal Burden on Airlines: Compensation and Cost Concerns
Under Israel’s Aviation Services Law, airlines are legally obligated to compensate passengers for flight cancellations, delays, and significant schedule changes. This includes providing alternative flights, hotel accommodations, and sometimes even meals for stranded passengers. However, airlines are facing a significant challenge: when flights are canceled due to emergencies, including the ongoing security crisis, they still risk facing substantial compensation claims from passengers.

For low-cost carriers such as Wizz Air, Ryanair, and EasyJet, this poses a particularly difficult situation. These airlines often sell discounted tickets, and if they are forced to arrange alternative flights for passengers, they may have to pay significantly higher costs than the original fare. As a result, many foreign airlines are opting to cancel their routes to Israel altogether rather than risk incurring these costly liabilities.

Proposed Amendments to the Law: Industry Relief or Insufficient Support?
In response to the growing concerns of foreign airlines, Israel’s Civil Aviation Authority (RA) has proposed amendments to the Aviation Services Law. The proposed changes aim to provide some relief to carriers operating under the prolonged state of emergency, including relaxing the requirement for airlines to prove they made every effort to prevent flight cancellations. These adjustments would allow airlines to be exempt from compensation without the need for proof of damage, particularly in the case of cancellations linked to security concerns.

Additionally, the proposed law would grant the Minister of Transportation the authority to limit the number of hotel nights airlines are required to provide to stranded passengers, with a minimum of two nights. Airlines would also be exempt from compensation if they can demonstrate challenges in planning flights due to the ongoing security crisis.

However, foreign carriers argue that these changes do not adequately address the full scope of the crisis. In particular, they believe the exemptions for compensation should be retroactively applied from the beginning of the conflict, rather than only for the first weeks of the war. The airlines also express frustration that the amendment does not tackle the issue of refunding or arranging alternative flights for passengers.

Alternative Flights and High Costs: A Growing Strain on Foreign Airlines
A key point of contention for foreign airlines is the difficulty in arranging alternative flights for canceled passengers, especially when their own services to Israel are suspended. With the limited number of available flights and many airlines halting operations, passengers often have no choice but to book replacement flights themselves, sometimes at prices vastly higher than their original ticket.

For instance, a passenger who paid $300 for a flight may end up demanding compensation for a replacement ticket that costs several thousand dollars. In the absence of competition from foreign carriers, this situation has created a monopoly-like environment where Israeli airlines control ticket prices, which have soared to illogical sums.

The airlines argue that this is not only a financial burden but a logistical nightmare. In addition to the high costs of alternative flights, passengers are also seeking compensation for hotel stays—sometimes in expensive accommodations—adding further strain on the airlines’ ability to operate profitably.

Call for Government Intervention: Assistance for Foreign Airlines
Foreign carriers have called on the Israeli government to step in and offer assistance, including measures similar to those provided to local airlines, such as insurance coverage for their operations.

Attorney Shirley Katzir, representing 20 international airlines, has urged the Economic Committee to reconsider the current regulatory framework. According to Katzir, foreign airlines are being forced to operate under a legal regime designed for “normal days,” with no provisions for the extraordinary circumstances of a prolonged state of emergency. She argues that the failure to adjust the law to the current reality could lead to further losses for these airlines, and ultimately, the suspension of their operations in Israel altogether.

Legal and Financial Strain: A Growing Crisis in the Aviation Sector
Foreign airlines are already dealing with a wave of class action lawsuits and small claims from passengers seeking compensation for cancellations and delays. Katzir warns that this is causing substantial financial losses and a growing backlog of legal issues for airlines. The lack of an appropriate legal response to the ongoing crisis has left many airlines unwilling to resume services to Israel, further exacerbating the already dire situation for the local aviation industry.

If the government fails to address these concerns quickly, foreign carriers may not only withhold their services for the remainder of 2024 but could also decide not to plan their flight schedules for the summer of 2025. This would result in further monopolization of the market by Israeli airlines, leading to even higher prices for passengers and a prolonged crisis for Israel's aviation sector.

Conclusion: Uncertainty Looms Over Israel’s Aviation Industry
As the conflict continues and the aviation crisis deepens, the future of Israel’s flight connections remains uncertain. Foreign airlines have made it clear that without significant regulatory changes and government support, they will not be able to justify resuming operations to Israel. With ticket prices skyrocketing and limited flight options, Israeli consumers are feeling the pressure of a monopolized market. The government’s response to the demands of foreign carriers and its ability to adjust the legal framework to accommodate the ongoing emergency will determine whether Israel’s aviation industry can recover—or if the crisis will persist.