Competition Authority Investigates El Al’s Ticket Price Surge

By Aryeh Stern

The Israel Competition Authority has initiated an inquiry into the surge in ticket prices for El Al flights. This examination is being conducted administratively and does not fall within the Authority’s jurisdiction to investigate criminal activities.

El Al responded, stating, “Since the outbreak of the war and its aftermath, El Al has maintained an ongoing and transparent dialogue with the Competition Authority regarding fare issues. We have implemented a cautious pricing strategy, tailored to the circumstances, and we are confident that the investigation will demonstrate the company’s fair and proper conduct, despite the challenges presented by the situation.”

El Al’s financial report for the fourth quarter of 2023, released at the end of February, showcased significantly improved profitability despite the ongoing conflict. The airline reported a revenue of $678 million, marking a 21% increase from the corresponding quarter in 2022, with a net profit of $40 million, a surge of nearly 370% from $8.5 million in the fourth quarter of 2022. Following the commencement of the war, most foreign airlines suspended flights to and from Israel, granting El Al a virtual monopoly over the majority of routes from Tel Aviv.

Advocate Dana Tirangel-Lipka, partner and head of the antitrust and competition law department at Amit Pollak & Matalon (APM) law firm, and a former official at the Israel Competition Authority, explained, “The commissioner of the Competition Authority holds the power to impose fines on the company, up to 8% of its revenue and not exceeding NIS 100 million. Additionally, fines of up to NIS 1 million may be imposed on the company’s executives, with a broad definition extending beyond just the CEO to include any official responsible for the matter at hand.” She clarified that the burden of proof in such cases is administrative, requiring evidence of at least 51%, and the process typically involves an investigation, correspondence, a hearing, and a ruling, with the company retaining the right to appeal to the antitrust court.

Concerning El Al, Advocate Tirangel-Lipka suggested that the inquiry likely revolves around allegations of inflated fares, a practice typically associated with entities enjoying a monopoly. While El Al is classified as a monopoly in specific markets like Bangkok and Johannesburg, it is possible that its dominance extended to other markets during the war period. She further noted that while the Israel Competition Authority tends to avoid pursuing cases of overpricing, it has done so in the past. However, she emphasized that the unique circumstances of wartime do not necessarily implicate deliberate actions by companies to inflate prices but rather reflect external factors beyond their control. Consequently, she believes this case may not be as complex as others previously handled by the Authority.