Supreme Court Prohibits Travel Agencies from Charging Refund Handling Fees
Israel's Supreme Court ruled that travel agencies cannot charge handling fees for airline refund requests, triggering class-action lawsuits and industry warnings.
The Supreme Court of Israel has ruled that travel agencies are strictly prohibited from charging handling fees for processing ticket refunds from airlines following flight cancellations. The landmark decision, delivered by a three-justice panel headed by Justice Gila Canfi-Steinitz, stems from a minor claims dispute over a $30 fee which has since escalated into five class-action lawsuits against major industry players.
Legal experts emphasize the profound impact of this ruling on the entire tourism sector. Attorneys Shirley Katsir and Amir Varon from the FBC law firm's aviation and tourism department noted that several new class-action requests have already been filed against various travel agencies, exposing them to retroactive claims for fees collected over recent years.
Statutory Obligations and Legislative Silence
Under Israeli law, travel agencies serve as an intermediary link, bearing a statutory obligation to assist consumers in recovering funds for canceled flights. The Supreme Court concluded that legislative silence on the matter indicates an implicit prohibition against deducting handling fees from customer refunds. The court reasoned that processing a refund is a straightforward statutory duty integral to the overall service for which the client engaged the agency.
Furthermore, the court referenced a temporary pandemic-era provision that had previously permitted agencies to charge handling fees. Because that provision has since expired, the court inferred that such charges are prohibited under normal circumstances. The primary purpose of the statutory duty is to facilitate seamless reimbursement for travelers without allowing intermediaries to diminish the returned funds.
Industry Pushback and Requests for Rehearing
In response to the mounting legal exposure, travel agency Issta has petitioned the Supreme Court for an additional hearing, backed by the Travel Agents Association. Legal representatives argue that the ruling imposes a sweeping sector-wide ban without adequately considering economic ramifications or the historical reliance of agencies on prior lower court rulings that permitted reasonable, transparent fees.
Attorneys Varon and Katsir pointed out that both the Consumer Protection Authority and the Ministry of Transportation previously maintained that travel agencies were legally permitted to charge handling fees. Agencies argue that processing refunds involves significant operational overhead, including customer service, accounting, and credit card processing costs, making the handling fees necessary to mitigate administrative losses.
