$400m class action suit filed against El Al

El Al

The Israeli airline is being sued for not refunding money for canceled flights and not informing passengers they are entitled to a refund.

A $400 million class action suit has been filed against El Al Israel Airlines Ltd. (TASE: ELAL) in the Central District Court in Lod for not refunding money to passengers who have paid for tickets for canceled flights. This follows similar suits in Israel against foreign airlines.

Estimates are that the Israeli airline holds NIS 1.5 billion of money of passengers who have paid for flights that have been canceled since the coronavirus outbreak in March. This sum continues to grow with El Al's fleet grounded until July 31 and that date almost certain to be extended.

The class action suit filed by Advs. Oded Steiff and Tamir Shenhav of the Steiff, Evron, Sides, Borochov & Co. law firm on behalf of the plaintiff claims that El Al's management has behaved in a way that expresses an 'anti-service' approach while expecting customers to show endless patience to an approach which ignores them. The amount of the class action suit equals the amount of money that El Al is asking for in loans and government assistance.

El Al has notified the Tel Aviv Stock Exchange (TASE) about the class action suit, saying that it is being sued for both not refunding the money and mot informing passengers that they are entitled to the refunds. El Al said, "We will study the suit and file a response as required."

In its notification to the TASE, El Al also points out that the Aviation Law has been amended, granting airlines an extension until August 31, during which time they do not have to refund canceled flights.

Adv. Steiff stresses that not only have the passengers not received refunds but they have also not received any customer service to tell them about the situation. The plaintiff who they are representing is entitled to a refund of NIS 3,700. When enquiring about his claim, he received the following telephone recording. "Following the coronavirus outbreak our offices are currently closed and work is being conducted on an emergency footing. Please keep any tickets at this stage for future use." The recording added that they ticket could be used, "following the return of scheduled operations."

Adv. Steiff describes this recording, which was heard by hundreds of people holding tickets for canceled flights, as 'contemptible.'

He added, "In contrast to the situation before the lawsuit was filed in which everybody who contacted El Al received an automatic answer ' we'll get back to you when we feel like it,' El Al will now be required to give an account to passengers. The effectiveness of the lawsuit is the message to El Al is that it cannot wave away or shrug off or play for time just as it fancies."

But such a suit could last for years?

"It doesn't have to last years. We don't see any way in which El Al will deny its obligation to refund customers their money. El Al is supposed to propose ways to a solution as part of a timetable. El Al has a toolbox with which it can cope with this suit without collapsing financially or without it being an obstacle on its way to recovery."

In that tool box, Adv. Steiff mentions hundreds of thousands of members of its frequent flyers loyalty club who could be offered alternative tickets that will express their readiness to wait and keep their purchasing power through passenger points, and to offer incentive coupons but mainly to provide consumers with a response. "We expect El Al to sort through their customers and hold a dialogue with them even if we are talking about tens or hundreds of thousands of phone calls."

El Al claims it doesn't have the staff for customer service

"El Al needs to understand the importance of this. Its coffers are not empty and the money it has can keep people. The more it conducts a dialogue with passengers, at a conservative estimate, it will pay out less cash. El Al needs to make people stay loyal even though they have received a slap and so far it has failed the test of initiating a response. One would have expected it to control the narrative from the start but it hasn't done that and because it hasn't done that you have to bring in something that has power, and that's a class action suit supported by legal process. If El Al takes its customers for granted, then it is a company with no right to exist and if there will be a ruling instructing it to pay, then it will have to cope with this. I hope that whoever buys it, pays better attention to its customers."

Published by Globes, Israel business news - en.globes.co.il - on July 14, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

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