Airlines in Israel seek extension on refund moratorium

El Al  / Photo: Yoav Yaari

El Al representatives have asked the Knesset Economics Committee to extend the moratorium on refunds to 120 days - August 31.

By law in Israel, airlines who cancel flights must refund passengers within 21 days of the canceled flight. To assist the airlines, some of which have grounded their entire fleets due to the coronavirus crisis, Israel legislators temporarily extended the 21 days to 90 days.

Estimates are that El Al Israel Airlines Ltd. (TASE: ELAL) alone holds $300 million in money for flights that have been cancelled because of the coronavirus crisis and that figure worldwide is many billions of dollars.

The Knesset Economics Committee is now discussing a request to extend the moratorium on refunds from 90 days to 120 days. Both El Al and Arkia have grounded their entire passenger fleets and the unpaid leave of employees until July 31 and it is unclear whether limited operations can restart in August, especially with the recent rise in the number of new Covid-19 infections.

The Knesset Economics Committee must balance the dire liquidity needs of the airlines with the needs of consumers, many of whom are on unpaid leave and desperate to get their money back and have been waiting since March to get their money back.

Nevertheless, representatives of El Al including CEO Gonen Usishkin, have asked the Knesset to legislate extending the moratorium from July 31 to August 31.

Israel Civil Aviation Authority legal advisor Ranana Shahar supports the extension saying that no dramatic change in the aviation situation is on the horizon. Anybody expecting Israel's borders to open in August should take note.

Published by Globes, Israel business news - en.globes.co.il - on June 22, 2020

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

El Al  / Photo: Yoav Yaari
El Al / Photo: Yoav Yaari
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