Israel's Supreme Court Rules Against Travel Agencies Keeping Fees on Canceled Flights

Israel's Supreme Court has ruled that travel agencies cannot charge commission fees when refunding passengers for canceled flights. The decision came in an appeal filed by Doron Ben-Shimon against the travel company "Issta". Justices Gila Kanfi-Steinitz, Yael Willner, and Dafna Barak-Erez stated that travel agencies are not entitled to retain commission when returning the full ticket price for a canceled flight.

Ben-Shimon had purchased a 1087 shekel ticket to Warsaw on Wizz Air through "Issta". After the airline canceled the flight, "Issta" refunded him only 911 shekels, keeping the difference as a service fee. A small claims court and the Tel Aviv District Court had previously rejected Ben-Shimon's claim for the returned amount.

The Supreme Court agreed to hear the case as a precedent-setting matter, noting that lower courts had issued conflicting rulings on the issue. The Aviation Services Law mandates that passengers receive a full refund for canceled flights, including all fees and taxes, within 21 days. Travel agencies are obligated to assist passengers in obtaining these refunds upon request.

While the law does not explicitly address agency fees for this assistance, a temporary regulation during the COVID-19 pandemic had permitted such charges. The court concluded that because the legislator specifically limited this permission in time, it is now prohibited after the temporary regulation expired. The court emphasized that the law's purpose is to protect consumers and guarantee their minimum rights, not to allow a reduction in the amount they are owed.

Justice Barak-Erez added that travel agencies can factor the potential need to assist with refunds into their pricing. "Issta" has been ordered to repay the withheld amount to Ben-Shimon with interest and indexation from the date of his initial claim, along with 5000 shekels in legal costs.