Israel’s flag carrier, El Al, has had a record-breaking past year. Its share price has risen 173% as the Israel-Hamas War has caused cancellations from other airlines, giving El Al near monopoly status on many routes, Globes reported last month.
The airline’s 2024 Q2 net profit was $147 million, far and away from $59 million a year ago, Reuters reported.
Critics have accused El Al of price gauging, as some customers have struggled to book tickets for prices anywhere near what they booked before the war, and others have struggled to find tickets at all.
The airline has said that it is doing all it can to provide a response to “strong demand and unusual load on El Al’s service network.”
Some of the anger at prices from consumers has been exacerbated by El Al’s marketing campaigns that they are supporting Israelis through the war and through the challenges to travel imposed by the war.
In one El Al commercial, Israelis on a trip are seen rushing back to join their IDF units for reserves duty after receiving news of the October 7 Hamas massacre. After they are unable to return to the country with other airlines, they are given seats on an El Al flight home.
The dissonance between these sentiments of support used in marketing and the feeling that El Al is overcharging has left some consumers feeling even more taken advantage of.
It should be noted that El Al lived up to this marketing this weekend when it sent out rescue flights to Israelis in Amsterdam following violent attacks against Maccabi Tel Aviv fans. El Al sent eight flights, bringing 2,000 Israelis back to the country on fully El Al-funded flights, according to the airline. For some, however, this step-up to bring back stranded Israelis is too little too late.
El Al introduced some price caps on its flights
El Al capped prices for some of its flights through the end of November, setting maximum prices aimed at helping customers continue to afford tickets, the company said.
El Al direct round trip tickets to London Heathrow were capped at $877, tickets to Paris at $829, Budapest at $590, and all US destinations at $1998.
These prices are still much higher than what many El Al flyers are used to, leading to the question – if El Al can cap prices in order to support customers, why can’t it cap prices at lower levels – more similar to what those who fly the airline are used to seeing?
Skyscanner explained that air travel tickets are priced according to various factors, including demand, search aggregators, and travel agencies. Seats on a plane are sold in price “buckets,” meaning the same seats are sold at different prices as all the seats in one price bucket sell out, leaving the seats in higher price buckets.
“Airline pricing models are complex, with tickets priced low enough so passengers can afford them while keeping airlines profitable,” according to Hugh Aitken, VP of Flights at Skyscanner.
“Airlines use complicated algorithms to set their pricing, which weigh up determining factors including the nature of the airline (e.g., is it a low-cost carrier or premium airline), the itinerary, and the cabin class.”
El Al has struggled to handle the massive increase in demand for its tickets as the Israel-Hamas war has left many feeling that El Al is the only reliable airline to fly with.
“Given the instability of the aviation industry in Israel and the increasing pressure on our flights, we are working fervently to increase seat capacity and expand our flight schedule,” El Al CEO Dina Ben Tal Ganacia said in a statement on El Al’s financial results for Q 1, 2024.
This demand has likely pushed many consumers into price buckets they have never purchased tickets in before as others buy tickets before them, leaving them to purchase tickets at prices they don’t recognize. Still, this demand has also likely raised the average prices of El Al tickets.
The high caps El Al has set on tickets could stem from a desire to maximize profits, but there are other possible reasons for the airline not to cap prices lower.
Among these, if El Al caps prices “too low,” high demand for tickets could create a situation in which all tickets in the near future sell out, leaving Israelis with no options for immediate flights.
This would be crippling to the country in some ways, leaving Israelis unable to travel for family emergencies or last-minute business.
The current situation has also made last-minute travel unachievable for those who cannot afford high last-minute prices, but these tickets are still available for Israelis able and willing, or forced by circumstance, to pay the prices for last-minute tickets.
When it comes to air travel, Israelis are stuck, and this will likely continue to be the case until additional airlines resume service to the country.
Even then, it may take time for travelers to trust that security developments won’t cancel foreign airline flights again, leaving El Al facing much higher demand as the only airline Israelis depend on to actually get them where they are going and back home.
El Al did not provide a statement addressing price increases or caps at the time of publishing.
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