Are Israeli passengers on a flight that took off late from Europe entitled to the same compensation to which other passengers are entitled under European law? Ostensibly, there can be only one answer to this question - yes - but El Al Israel Airlines Ltd. (TASE: ELAL) thinks that the answer is no. It appears that El Al is wrong.
A court in Paris recently ruled that El Al could no longer argue that it compensates passengers only according to Israeli law. The ruling was given in an appeal filed by the company after losing a lawsuit against a passenger who demanded compensation for a flight from Paris to Tel Aviv that took off late. After the French court ruled that El Al had to pay the passenger €400 in compensation, El Al appealed, and will now also pay €3,000 in legal expenses to Claim It, the company that filed the claim for the passenger. Furthermore, the court also invited the Israeli passengers to sue for their right in French courts, even though the airline is Israeli.
El Al said in response, "El Al has received the ruling made by the court in France, and is studying it. El Al acts according to the law."
1. Why El Al toughened its compensation policy
European law is much less tolerant than Israeli law towards flights that took off late. It stipulates compensation of €250, €400, or €600 if a flight is delayed by three or more hours, depending on the flight distance. This compensation applies to all European airlines taking off from any airport, and also applies to any other airline, including El Al, taking off from Europe.
In contrast, Israeli law stipulates compensation varying from NIS 1,300 to NIS 3,080 according to flight distance, but it applies only to delays of eight hours or more. This period of time, which is much less beneficial to passengers, reflects El Al's lack of flexibility in comparison with airlines in Europe. If one of El Al's airplanes breaks down, its ability to bring another airplane to replace it and prevent a prolonged delay is significantly inferior to that of a European airline having an alliance with other airlines. El Al is also usually unable to fly in a plane from a neighboring country within a short time.
In view of the more stringent law in Europe, which would have cost El Al large sums, the company made its policy more stringent by declaring that it would obey only Israeli law. Many passengers receive this answer and do not continue their struggle for compensation.
2. Israir and Arkia have a different policy
Israeli airlines Israir Airlines and Tourism Ltd. and Arkia Airlines Ltd., which are not eager to compensate passengers for delays, have much less business in Europe than El Al, and do not maintain offices on the continent.
The court therefore treats them differently. Only recently, a Dutch court ruled in a claims filed against Arkia that since the airline has no offices in Europe and flies mainly Israeli passengers, compensation in its case should be heard in Israeli jurisdiction.
3. A successful method: "El Al discriminates against passengers"
Claim It, which handles compensation for passengers on flights in return for 25% of the amount, is current conducting similar cases in courts in Romania, Poland, the UK, Italy, and Germany. The website works with dozens of airlines. "No airline is eager to pay compensation," Claim It CEO Ralph Pais told "Globes," "but El Al's behavior is extreme. El Al does not to obey the law in Europe, at least not for Israelis."
Pais believes that the amount of compensation that El Al should pay its passengers for delays in flights in recent years amounts to millions of dollars. "Outstanding claims through Claim It alone total €400,000. El Al prefers to go to court and pay lawyers to paying passengers what they are entitled to. In many cases, El Al seeks a compromise shortly before a judgment is handed down. Its strategy is to refuse to pay until it has no choice."
Pais makes a clear distinction between situations in which El Al, like other airlines, is not obligated to pay compensation - when the delays result from force majeure, such as bad weather, an unplanned strike, or a security situation not subject to the airline's control. "But when El Al argues that it discriminates against Israeli passengers because of the Israeli law, you shouldn't accept it. Many passengers accept this argument and don’t insist on getting what they are entitled to. Is this method successful? Obviously, and it works."
Pais adds, "Just as El Al can demand that a passenger with excess baggage pay, it can't evade the payment it has to make. My message to the Israeli passengers is not to give up, and if a claim must be filed, don't be afraid to sue in Europe."
4. What about low-cost airlines?
Pais says, "Low-cost airlines have different policies. In many cases, claims for compensation go to court. I can say that Wizz Air respects its passengers, and when they demand the compensation to which they are entitled, it pays almost immediately. easyJet behaves quite reasonably. The situation with Ryanair is a catastrophe. What is ridiculous is that the airlines don't realize how much this affects their passengers' satisfaction. They once asked Ryanair CEO Michael O'Leary how much the passengers' low satisfaction affected the company. He answered that he flew planes full of dissatisfied people. Few other airlines can take comfort in that.
"We did a study of our customers and asked them what they do with the compensation money. Most of them buy a ticket with the money, usually with the same airline, so maybe it will pay for El Al to start compensating its passengers," Pais concludes.
Published by Globes, Israel business news - en.globes.co.il - on January 23, 2019
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