Israel’s competition regulator has rocked the country’s aviation and tourism sector by announcing its intention to levy a record NIS 121 million fine on El Al Israel Airlines for what it calls “excessive and unfair” pricing during the Gaza war. The proposed sanction, equivalent to roughly 33 to 39 million dollars depending on exchange rates, targets Israel’s flag carrier for allegedly exploiting a de facto monopoly between October 7, 2023 and May 2024, when most foreign airlines pulled out of Tel Aviv. El Al vehemently denies the accusations, insisting that modest average fare hikes were justified in the face of surging demand, soaring risk and unprecedented operational pressure. The clash sets up a landmark test case over wartime pricing, monopoly power and passenger rights that will reverberate far beyond Israel’s borders.

How El Al Became a Wartime Lifeline and a Dominant Monopoly

When Hamas attacked Israel on October 7, 2023, the country’s air connectivity was thrown into chaos. Within days, many foreign carriers suspended service to and from Ben Gurion Airport, citing security concerns, insurance costs and operational risk. Routes that had long been served by a diverse mix of European, North American, Asian and Gulf airlines suddenly vanished from booking platforms. For Israelis abroad trying to get home, and for families desperate to bring relatives out of the country, the options narrowed dramatically.

In this vacuum, El Al emerged as the primary, and often only, carrier still operating a full schedule. According to the Israel Competition Authority, El Al’s market share jumped from around 20 percent of passengers on the eve of the war to more than 70 percent within days. Over the first months of the conflict, its overall share remained above 50 percent, and on many routes the airline was the sole operator. Regulators now say that during the period from October 7, 2023 through the end of May 2024, El Al functioned as a monopoly on inbound and outbound flights for the practical purposes of most travelers.

For passengers, this concentration of power translated into a stark reality. With foreign carriers gone or operating minimally, freedom of movement into and out of Israel effectively ran through El Al’s booking system. Regulators argue that this conferred extraordinary market power on the airline at precisely the moment when travel was not a luxury, but a necessity tied to safety, family reunification, work obligations and medical care. Critics say that in such circumstances, pricing decisions cannot be treated as a standard exercise in supply and demand.

El Al, for its part, has highlighted the other side of the story: it kept flying when others did not. Company executives point to the airline’s missile defense systems, specialized training and long experience operating under threat, all of which allowed it to maintain critical air links in a period of national trauma. The carrier contends it stepped up capacity on key routes, repatriated thousands of citizens and absorbed operational and security complexities that competitors were unwilling to bear.

The Israel Competition Authority’s Case: “Excessive and Unfair” Pricing

The record penalty is rooted in an extensive investigation by the Israel Competition Authority, which examined how El Al priced tickets during the war months compared with pre-war baselines. Regulators say they carried out complex before-and-after economic analyses across dozens of routes and booking scenarios. Their conclusion is that El Al crossed the line from high pricing in a tight market to monopolistic abuse of an essential service.

At the core of the case is a reported 16 percent average increase in fares for economy and premium classes over the war period, with typical route-specific increases ranging between 6 and 31 percent. On some flights that even departed with empty seats, the authority found that El Al had raised ticket prices by around 25 percent. This, in the regulator’s view, undercuts any claim that price hikes were merely a reflection of capacity shortages or last-minute demand.

The authority’s language has been unusually sharp. By labeling the fares “excessive and unfair,” it invoked a high legal threshold rarely used in Israeli antitrust practice. Officials emphasize that the term “excessive price” has appeared only once before in local case law, in connection with a life-saving medication. To apply the same standard now to airline tickets signals that regulators see air travel during the war as more than a typical consumer service; they cast it as a near-essential right vital to citizens’ safety and autonomy.

The proposed NIS 121 million fine is the maximum administrative penalty allowed by law. The money, if ultimately imposed, would go to the state treasury rather than directly compensating passengers. The authority has also stated its intent to formally recognize El Al as a monopoly over the wartime period, a designation that would bolster future enforcement and provide a powerful signal to other companies operating under emergency conditions.

El Al has reacted with forceful rejection of both the findings and the proposed penalty. The airline argues that the authority’s economic analysis is flawed and unprecedented, and it contests the central claim that a 16 percent average increase in fares can be considered proof of excessive pricing. Executives say that in the volatile context of war, comparing pre- and post-conflict averages overlooks the complexity of operational decisions, yield management systems and risk-based costs.

In a written statement, the airline stressed that it “categorically rejects” accusations of price gouging and insists it has always acted in line with Israeli law, including competition rules. Managers emphasize that during the war, El Al implemented internal price ceilings on certain destinations, added flights where possible and tried to keep at least some lower fare buckets available to travelers who booked early. Airline officials also say that some of the highest ticket prices cited by critics were associated with last-minute purchases in peak periods, where yields are typically higher even in normal times.

The carrier plans to present a detailed rebuttal at the formal hearing required before any final fine is imposed. Industry observers expect El Al to draw on independent economic experts who will argue that the price increases reflected extraordinary operating circumstances: increased fuel hedging risk, higher insurance, potential diversion costs, personnel premiums and aircraft utilization constraints. The airline may also point to its record capacity deployment on critical routes and to the fact that it continued to operate even when missiles and drones threatened Israel’s skies.

Beyond the regulator’s proceedings, El Al is already battling separate class action lawsuits in Israeli courts that accuse it of exploiting the war for windfall profits. These filings, brought on behalf of passengers, allege “legally prohibited monopolistic price gouging” and seek damages that could reach into the billions of shekels. A negative decision from the Competition Authority could strengthen those civil suits, raising the stakes for the airline’s balance sheet and reputation.

Record Profits, Public Anger and a Question of Solidarity

Fueling public outrage is the stark contrast between El Al’s wartime profits and the hardship experienced by many of its passengers. Court filings and financial reports indicate that the airline’s net profit surged in 2024 compared with 2023, with some analyses suggesting earnings in the mid-hundreds of millions of dollars. These figures would make 2024 one of the most profitable years in El Al’s modern history, surpassing what the airline earned in the decade and a half before the war combined.

Critics see a direct line between that profit windfall and the absence of foreign competitors. With El Al holding dominant or near-total market share on major routes to North America, Europe and Asia, travelers often had little choice but to pay whatever fares were available if they wanted to travel at all. The Competition Authority notes that El Al’s share on some North American routes approached 97 percent, with load factors near 96 percent on many flights. To consumer advocates, these numbers look less like normal market success and more like a monopoly squeezing a captive public.

Over the course of the war, stories circulated in Israeli media of students stranded abroad, families paying several times their usual ticket costs to fly home and travelers watching prices spike within hours as they tried to assemble urgent travel plans. Social media amplified these anecdotes, portraying El Al’s pricing as a betrayal of the national ethos of mutual responsibility during crisis. For many Israelis, the flag carrier is not just another airline, but a symbol of national resilience that they expected to show restraint.

El Al maintains that it did act with solidarity, pointing to special fixed-price programs it launched on select routes and to cooperation with government agencies to bring citizens home. Executives also argue that in many markets, even after the war began, advance purchase fares remained relatively close to 2019–2022 levels and that only late-booking and peak flights reflected drastic increases. The coming legal proceedings will probe whether those explanations withstand closer economic scrutiny.

What This Means for Travelers and Israel’s Tourism Recovery

For passengers and the wider travel industry, the confrontation between El Al and the Competition Authority arrives at a delicate moment. After more than two years of conflict, Israel’s inbound tourism sector is still struggling to regain ground. Many foreign carriers have only partially restored capacity, while others remain cautious amid ongoing security concerns and uneven demand. Travel agents report that group bookings, pilgrimage tours and business travel all remain well below pre-war norms.

A record fine and possible restrictions on El Al’s pricing practices could reshape how airfares are set for routes to and from Israel. If regulators follow through on their tough stance, the airline may be deterred from aggressive yield management during future crises. On the other hand, El Al could respond by tightening capacity growth, being more conservative on route expansion or pulling back discounts in calmer periods to rebuild margins. Either outcome will affect ticket prices, availability and route diversity for years to come.

International travelers considering trips to Israel will be watching for signs of stability. A clear regulatory framework that defines acceptable pricing in emergencies could reassure visitors that they will not face sudden, uncontrolled fare spikes should security conditions deteriorate again. At the same time, some in the aviation sector warn that overly punitive enforcement risks discouraging airlines from maintaining service in dangerous environments at all, if the reward for risk is tightly capped while liability for high prices is expanded.

For now, travelers are advised to pay closer attention to booking windows and flexibility. Early planning, the use of connecting itineraries through regional hubs and close coordination with travel advisors can still help mitigate costs. But the broader question of what constitutes fair pricing when the aircraft seat itself becomes a lifeline rather than a discretionary purchase remains unresolved.

Global Context: Wartime Pricing and Competition Law

Israel is not the first country to grapple with accusations of price gouging in the midst of crisis. Around the world, regulators have scrutinized airlines after natural disasters, pandemics and regional conflicts, particularly when carriers lift prices sharply on evacuation routes or essential domestic corridors. However, formal findings of “excessive pricing” under competition law remain rare, especially in aviation, where costs and risks can shift rapidly and are difficult to document in real time.

The El Al case could therefore become a touchstone for future enforcement in other jurisdictions. If the Competition Authority’s approach is upheld by Israeli courts, it will show that regulators can, in practice, define and sanction excessive pricing in the airline sector, at least where monopolistic conditions and emergency circumstances coincide. This may embolden watchdogs elsewhere to examine how carriers behave when they are the last or only operator into a crisis zone.

The case also raises a philosophical issue at the heart of travel economics. Airlines traditionally use dynamic pricing to balance supply and demand, shifting fares over minutes or hours based on load factors and booking curves. From a revenue management perspective, higher prices when demand spikes and capacity is fixed are a feature, not a bug. Yet when those spikes are caused by war or disaster, and when the service is closer to an emergency lifeline than a discretionary purchase, public expectations shift from pure market logic toward moral restraint.

How courts frame this tension between market freedom and ethical responsibility in Israel will send an important signal. A ruling that affirms the regulator’s position might encourage new guidelines, or even legislation, to govern pricing during states of emergency, not only in aviation but in other essential services like fuel, food and housing. A decision in El Al’s favor, by contrast, could reaffirm the primacy of dynamic pricing even in crises, with the expectation that political rather than legal tools be used to restrain abuses.

The Road Ahead: Hearings, Appeals and the Future of Israel’s Flag Carrier

The proposed fine against El Al is still subject to a formal hearing process in which the airline will present its evidence and arguments. This proceeding is likely to focus on technical questions: the accuracy of the authority’s price comparisons, the methodology for calculating average fare increases, the treatment of last-minute bookings and load factor data, and the extent to which wartime costs actually rose. Both sides are expected to bring detailed economic modeling and expert testimony.

Whatever the outcome at the administrative level, few observers expect the dispute to end there. El Al could challenge an adverse decision in court, potentially dragging the case out over several years. In parallel, class action suits by passengers will move forward, with plaintiffs’ lawyers seeking to use the authority’s findings as evidence of wrongful conduct. The possibility of overlapping regulatory penalties and civil damages adds significant uncertainty to the airline’s long-term financial planning.

At the same time, El Al must continue to operate as Israel’s primary international carrier, balancing investment decisions against legal risk. Fleet renewal, new route launches and strategic partnerships all depend on a stable regulatory and financial outlook. The airline’s shareholders and lenders will be weighing the costs of continued litigation against the potential reputational damage of early settlements or admissions of wrongdoing.

For travelers and the tourism industry, the unfolding saga is more than a corporate drama. It goes to the heart of what people can expect from a flag carrier in moments of maximum vulnerability. Was El Al a lifeline that reasonably adjusted its prices to survive in a war economy, or a monopolist that took advantage of a nation in distress? Israel’s regulators and courts are now tasked with drawing that line, and their verdict will help define the ethics of wartime travel for years to come.