Flag carrier El Al has had a record-breaking past year. Its share price has risen by 173% as the Israel-Hamas War caused other airlines to cancel flights, giving El Al a 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 gouging, 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 the “strong demand and unusual load on El Al’s service network.”
Some consumers’ anger over ticket prices has been exacerbated by El Al’s marketing campaigns in which the company said it was supporting Israelis through the war and through the travel challenges imposed by it.
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 were unable to return to the country with other airlines, they were given seats on an El Al flight to fly 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 image this weekend when it sent out rescue flights to Israelis in Amsterdam following violent attacks against Maccabi Tel Aviv fans. El Al sent eight fully-funded flights to bring 2,000 Israelis back to the country, 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.
The airline’s direct round trip tickets to London’s Heathrow Airport 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 fares more similar to what those who fly the airline were used to seeing?
Skyscanner explained that air travel tickets were priced according to various factors, including demand, search aggregators, and travel agencies. Seats on a plane were sold in price “buckets,” meaning the same seats were sold at different prices as all the seats in one price bucket sold out, leaving the seats in higher price buckets.
According to Hugh Aitken, the VP of strategic relations and development at Skyscanner, “Airline pricing models are complex, with tickets priced low enough so passengers can afford them while keeping airlines profitable.”
“Airlines use complicated algorithms to set their pricing that weigh up determining factors, including the nature of the airline (e.g., is it a low-cost carrier or a premium airline?), the itinerary, and the cabin class,” he said.
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 Ganancia said in a statement on El Al’s financial results for Q1, 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. Further, the demand has also likely raised the average prices of El Al tickets.
Therefore, 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 set the cap at lower prices.
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 other urgent 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 those prices.
When it comes to air travel, Israelis are stuck, and this will likely continue to be the case until additional airlines resume their services to the country.
Even then, it may take time for travelers to trust that security developments won’t cause foreign airline flights to cancel again, leaving El Al to face much higher demand as the only airline Israelis can depend on.
El Al did not provide a statement addressing price increases or caps at the time of publishing.