Estimates are that Israel's three airlines - El Al Israel Airlines Ltd. (TASE: ELAL), Arkia Airlines Ltd. and Israir Airlines and Tourism Ltd. hold about $100 million paid by individuals and travel agencies for flights that were canceled. "We will demand that before the airlines receive aid, they will be asked to take care of their debts to consumers and travel agents regarding refunds of flights that were canceled," said Adv. Dror Strum, who has been representing the Israel Association of Travel Agencies in matters relating to the International Air Transport Association (IATA).
By law airlines are required to refund customers within 21 days for canceled flights - something they have refused to do. Strum is strenuously opposed to a bill in the Knesset to amend the law, giving the airlines 90 days to refund customers.
He said, "We will file vehement opposition while demanding that aid to the Israeli airlines is contingent on refunding consumers money, also due to the fact that travel agencies are caught up in this with consumers booking through them now demanding their money back before the travel agencies get the money back from the airlines. It's an absurd situation. Consumers are also contacting credit card companies and canceling future payments on flights that were canceled, and there is a legal dispute on whether it is fair that the consumer takes revenge on the travel agent through the credit card companies. There is a triangular relationship here between the airlines, travel agencies and consumers and somebody has to put it in order."
What do you think of the response customers have got from El Al, for example, that they will be refunded when the airline returns to normal?
"If they told the consumers that at the moment it's possible to refund 50% or 75% of every shekel that they owe them, and the rest later on, that would be an answer that could be part of some sort of arrangement. That's something that the market would understand. But even on that someone must take responsibility."
"Markets need certainty, and in crisis management you must tell the truth, and at the moment there is no credibility, no certainty and mixed messages. It would be preferable for the airlines to tell customers what it can repay in the coming months, something that would reflect a true reality."
"If the airlines really don't want to refund money to customers, and offer vouchers for future flights, then they should at least respect them and offer an incentive to encourage that choice, for example through a more expensive voucher, an upgrade, a bonus or other related service. While they continue to force consumers to accept a voucher for flights that were canceled because of the coronavirus, then governments must intervene to prevent aid or a loan, until all the money has been given back to customers. The situation of the airlines is bad but so too is that of the consumers, with more than a million unemployed in Israel, it doesn't let many people support the airlines at the moment."
Worldwide airlines owe their customers an estimated $35 billion for canceled flights. In the US Senators are demanding that aid to airlines is linked to refunding customers while in the UK, low-cost carriers EasyJet and Ryanair, were forced to put refund forms back on their website after they were taken down.
Published by Globes, Israel business news - www.globes-online.com - on April 22, 2020
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