JERUSALEM — Israel’s Competition Authority has notified El Al Israel Airlines (LY) that it intends to impose a financial sanction of up to NIS 121 million (about US$39 million), alleging the flag carrier charged “excessive and unfair” airfares during the Israel–Hamas war period in the Gaza strip, though the move is not final and remains subject to a hearing where LY can present its case.

According to The Times of Israel, the regulator’s investigation focuses on October 7, 2023 through the end of May 2024, when many foreign airlines curtailed or suspended service and LY's market position surged. The Authority said LY held monopoly conditions on at least 38 of 53 routes, including major markets such as London, New York, Paris, Bangkok, Tokyo, and Los Angeles, while Israeli carriers Arkia (IZ) and Israir (6H) also continued operating but at much smaller scale.

Based on an analysis of millions of tickets, the Authority found fares increased by ~16% on average, with some routes rising as much as 31%; it also said prices climbed by ~25% even on flights that weren’t fully booked in economy, underscoring the regulator’s view that the increases weren’t simply explained by peak-load conditions.

El Al rejected the allegation, arguing there is no precedent for concluding that an average increase of 16% (a figure it disputes) constitutes “excessive pricing,” and said it will present its full position at the hearing and in other legal forums if needed.

This case is a test of how aggressively regulators will police airline pricing when crisis conditions compress competition and turn capacity into an essential service.

If the Authority sustains its findings after the hearing, the precedent could force carriers to rethink wartime/disruption yield strategies, strengthen transparency around pricing drivers, and anticipate faster escalation from public outrage to enforcement, especially in markets where the flag carrier becomes the default option overnight.