Israeli Supreme Court Rules Travel Agencies Cannot Charge Fees for Canceled Flight Refunds

The Israeli Supreme Court has ruled for the first time that travel agencies are not permitted to charge service fees when refunding passengers for canceled flights. Justice Gila Kenaf-Steinholtz stated that this ruling has broad implications, especially given the frequent flight cancellations in recent years, often for security reasons.

The case involved Doron Ben-Shimon, who purchased a flight ticket to Warsaw for 1,087 shekels through the travel agency Ista. Wizz Air canceled the flight, and Ista refunded Ben-Shimon only 911 shekels, keeping the difference as a handling fee. The Small Claims Court and the Tel Aviv District Court both rejected Ben-Shimon's claim for the refund of the difference.

However, Justice Kenaf-Steinholtz agreed to hear the case in a rare third appeal. She noted that lower courts had reached conflicting decisions on whether travel agencies could deduct such fees. "The legal question that leads to contradictory results is worthy of examination; it is therefore good that we establish a precedent," she wrote.

The Aviation Services Law mandates that in case of flight cancellation, the airline or organizer must refund the full amount paid for the ticket, including all taxes and fees, within 21 days of the passenger's written request. The law also requires travel agencies to assist passengers in obtaining refunds. While a temporary regulation during the COVID-19 pandemic allowed agencies to charge a fee, Kenaf-Steinholtz concluded that the expiration of this regulation implies that such fees are now prohibited.

She reasoned that the law's purpose is to protect consumers and ensure they receive their money back, not to allow agencies to deduct from it. The act of an agency contacting the airline is considered part of their customer service and does not warrant a separate charge. Consequently, Ista was ordered to refund Ben-Shimon the deducted fee, with interest and linkage since the lawsuit was filed, and to pay 5,000 shekels in legal costs. Justices Yael Willner and Daphne Barak-Erez concurred with the ruling.