Israel's Supreme Court Rules Travel Agencies Cannot Keep Fees on Canceled Flights
Translated & summarized from Calcalist by baba
Israel's Supreme Court ruled that travel agencies cannot charge handling fees on refunds for flights canceled by airlines, overturning a previous practice that was temporarily allowed during the COVID-19 pandemic. The court ordered one agency to refund the deducted fees to a passenger.
The story in 5 lines · by baba
- Supreme Court ruled travel agencies can't keep fees from canceled flight refunds.
- Temporary COVID-19 regulation allowing fees has expired.
- Agencies must pass full refunds to passengers once received.
- Ruling may have broad implications for the travel industry.
- One agency ordered to refund fees and pay costs.
Israel's Supreme Court has ruled that travel agencies are not permitted to deduct handling fees from refunds owed to passengers whose flights were canceled by the airline. The decision came in a case involving a passenger who purchased a flight to Warsaw for 1,087 shekels through the travel agency Ista. After Wizz Air canceled the flight, Ista refunded the passenger only 911 shekels, keeping 176 shekels (approximately $47) as a handling fee.
Ista had argued that the fee was permissible under its terms of service, which the customer had agreed to, and that it had charged a reduced fee of $30, with the remaining $17 not having been returned to them by the airline. The passenger sued Ista in small claims court. Initially, the small claims court dismissed the case, and a subsequent appeal to the District Court was also denied. The District Court had ruled that agencies could deduct fees if the passenger explicitly agreed contractually.
However, the Supreme Court, hearing the case as a third appeal due to its broad implications, decided to review it. Justice Gila Kenan-Steinitz, writing for the court, stated that aviation service laws do not allow travel agencies to profit from their obligation to assist passengers in receiving full refunds for canceled flights. She clarified that a temporary regulation enacted during the COVID-19 pandemic, which allowed such deductions, expired at the end of March 2021. Since then, the original law, requiring full refunds, has been reinstated.
The court emphasized that travel agencies act as intermediaries, responsible for passing on the full amount from the airline to the passenger. While agencies are not liable for amounts the airline fails to transfer, once the funds are received by the agency, they cannot deduct fees before forwarding them. In this specific case, Ista was ordered to refund the deducted fee, plus linkage and interest, and pay 5,000 shekels in legal costs.
An attorney specializing in commercial law, Ariel Dubinsky, noted that the ruling could have significant implications for the travel industry, potentially affecting thousands of passengers and possibly leading to class-action lawsuits. Ista stated that it is reviewing the ruling and considering its legal options.
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