Airlines not rushing back to Israel despite impending law change

Ben Gurion Airport arrivals board  credit: Tali Bogdanovsky
Ben Gurion Airport arrivals board credit: Tali Bogdanovsky

Many foreign airlines made reduced compensation for delayed and canceled flights the condition for their return, but the security situation appears to be weighing more.

After nine months and five sessions on the matter, last week the Knesset Economic Affairs Committee voted in favor of an amendment to the Aviation Services Law, which protects travelers’ rights in the event that a flight is delayed or canceled. The amendment eases the terms for compensation that airlines must provide to passengers whose flights are canceled. Foreign airlines have been demanding the change because of the frequent need to cancel flights during the war and the high cost of providing passengers with alternative flights on different airlines.

Despite the positive signal to the foreign airlines that their demands are being met, there has been little response on their part so far. Aviation industry sources say that there is almost no contact with foreign airlines with a view to them resuming services to Israel. At the same time, the pace of events in Israel, especially the missile attacks from Yemen, creates a new-old challenge for the airlines. A plane of Greek airline Aegean had to make a stop in Larnaca on its way to Israel because of sirens warning of an incoming missile.

At any rate, the foreign airlines are not rushing back, despite the fact that many of them stated that the amendment to the law was their condition for doing so. Air France, for example, which was one of the airlines that openly backed the amendment, announced that its flights to Israel would be suspended for a further week. Adv. Shirly Kazir, who heads the Aviation & Maritime and Hotels & Tourism practices at law firm FBC, and who represents several airlines, among them British Airways, said that 50,000 seats could be added as soon as this month if the amendment finally became law. The test for the airlines should come very soon, after the amendment is given second and third readings in the Knesset, generally a technical procedure.

Ryanair, which openly supported the amendment, after revealing that it had had to pay passengers compensation amounting to almost €4 million, has said that the amendment will not be enough to ensure its return to Israel without the reopening of Terminal 1 at Ben Gurion Airport to international flights.

Before the war, some 90 foreign airlines operated at Ben Gurion Airport, but currently there are only 26. After the ceasefire in Lebanon came into force, Air Seychelles announced that it would be returning, and by the end of this week it will become airline number 27. Its return is welcome, but it operates only a few flights to a small number of destinations, so the effect on the sector is minimal.

The only certainty: Consumers will be hit

If the airlines do not return, passengers will be liable to find themselves in a situation in which flights are cancelled or substantially delayed, and they are not entitled to any financial compensation beyond the cost of their tickets, and will have to bear what can be high costs arising from the cancellation of their flights, without any increase in competition that might bring down fares.

No date for a vote on the amendment to the Aviation Services Law in the Knesset plenum has yet been set, but in any case, whether or not the amendment leads to all the foreign airlines returning will depend on the security situation.

In any event, the US airlines, or at least some of them, are not expected to be back in Israel any time soon. In the case of long-haul flights such as between Israel and North America, changes in schedules and diverting planes from one route to another are complex matters that take time. Economic Affairs Committee chairperson MK David Bitan said that he would bring the bill forward for final approval by the Knesset plenum only after he had made sure that the government was abiding by its commitment to indemnify airlines that raised the number of their flights to North America, if they added two weekly flights. This mainly means Arkia and Israir, for which the move involves considerable risk.

The bill provides for state to cover 50% of operational losses to airlines in the event of flight cancellations for security reasons.

Published by Globes, Israel business news - en.globes.co.il - on January 6, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.

Ben Gurion Airport arrivals board  credit: Tali Bogdanovsky
Ben Gurion Airport arrivals board credit: Tali Bogdanovsky
Unframe founders credit: Yossi Yarom Israeli AI enterprise platform co Unframe raises $50m

Unframe’s turnkey AI solutions enable companies to solve any enterprise AI use case at scale with fully functional, customized AI solutions for businesses in a matter of hours, rather than months.

Combatica credit: Combatica Combatica launches next-gen VR AI training platform

The Israeli company's virtual reality platform includes 50 AI generated scenarios, seven maps and even situations for operating night vision.

Shekel credit: Shutterstock Vladirina 32 Shekel volatility after US tariffs announcement

The shekel is weakening sharply against the euro, which is gaining following the unveiling of Donald Trump's tariffs plan.

Minister of Finance Bezalel Smotrich credit: Noam Moskovitz Knesset Spokesperson Treasury assesses potential damage to Israel's US exports

Israel will be charged a higher tariff on its exports to the US - its biggest export customer - than Turkey and the UAE.

Iranian flag credit: Shutterstock Why inflation haunts Iran

With a month-on-month increase of 3.3% and an annual rate of 37.1%, inflation reflects the struggles of millions of Iranians.

APM merges with lawyers from Doron, Tikotzky Kantor, Gutman credit: Eyal Merilos APM merges with 12 lawyers from Doron, Tikotzky Kantor, Gutman

With the addition of these 12 lawyers, Amit Pollak Matalon & Co. will now have 135 lawyers.

US President Donald Trump credit: Reuters Sipa USA Israel on list as Trump unveils tariffs

Relatively low reciprocal tariffs will be imposed on Israeli goods sold in the US.

Deflated unicorn credit: Shutterstock Big Tech 50 reports more huge falls in startup valuations

Israeli R&D partnership Big Tech 50 reports that an investment of $2 million in Orcam made in 2021, shrank to just $31,000 at the end of 2024.

NextFerm technologies based on yeast credit: NextFerm Food-tech co NextFerm suspends operations

The company, which produces food ingredients in yeast without genetic engineering, cannot pay its debts and is seeking a buyer.

Minister of Finance Bezalel Smotrich credit: Shlomi Yosef OECD sees recovery in growth but high inflation

The OECD Israel Economic Survey 2025 recommends that the Israeli government take several restraining measures, in order to exit the economic storm created by the war.

Dano Ben-Hur credit: Dror Sithakol Statisticians contradict BoI on impact of housing finance deals

The Central Bureau of Statistics insists the impact of 20/80 buy now pay later financing deals on the real estate market and housing prices is minimal.

Governor of the Bank of Israel Amir Yaron  credit: Government Press Office Debt fears top Bank of Israel's concerns

Most unusually, Governor of the Bank of Israel Amir Yaron's press conference last week did not focus on inflation and the impending interest rate decision.

US President Donald Trump  credit: Reuters/Leah Millis Israel moves to avoid Trump's tariffs axe

Minister of Finance Bezalel Smotrich has signed an order canceling all tariffs on imports from the US. The impact will mostly be on agricultural produce.

Forbes Rich List credit: Shutterstock Maslowski Marcin Wiz founders ranked in Forbes 2025 Rich List

There are a few dozen Israelis listed in the 2025 Forbes Real-Time Billionaires List including Wiz founders Assaf Rappaport, Yinon Costica, Roy Reznik and Ami Luttwak.

SatixFy CEO Nir Barkan credit: Ariel Barkan Canada's MDA Space to buy Israeli satcom co SatixFy

MDA Space will pay $269 million for the Israeli company, including taking on a $76 million debt and a 75% premium on SatixFy's closing price on Nasdaq yesterday.

Raising dollars credit: Shutterstock Israeli startups raised over $1b in March

Israeli privately-held tech companies have raised $2.1 billion in the first three months of 2025, according to IVC-LeumiTech, up 24% from the corresponding quarter of 2024.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018