Israel travel agency refund fee: the Supreme Court bans handling fees on cancelled flights

Israel travel agency refund fee deductions are now banned on cancelled flights. The Israeli Supreme Court flight refund ruling says a travel agency may not keep part of the money an airline refunds. No source has reported the exact decision date. A judgment still applies from the moment the court issues it, not from some future date. Fixed EU261 compensation stays separate and unchanged.

The case turned on a single question: who was responsible for the money? The airline cancelled the flight, so the airline owed the refund. The agency merely passed that money through. Once the court settled this, the fee had nowhere to sit.

Is the Israel travel agency refund fee still allowed on a cancelled flight?

No. The Supreme Court held that once the airline has transferred the refund money to the agency, the agency must pass it on to the passenger in full, as Calcalist reported. Israeli agencies call this deduction dmei tipul, a handling fee. The court does not permit it on a cancelled flight.

Justice Gila Kanfi-Shteinitz wrote the ruling, and Justices Yael Vilner and Dafna Barak-Erez agreed. This is the first time the court has settled the point. Commentators describe the dmei tipul cancelled flight question as settled by precedent, not just one passenger's win.

Two things follow for anyone who booked through an agency. The refund is the ticket money, including fees and taxes. It is not a payment for the agency's trouble. The agency may not trim it on the way.

What did Doron Ben-Shimon's case against Issta over a Wizz Air ticket establish?

Doron Ben-Shimon bought a ticket to Warsaw on Wizz Air through Issta for 1,087 shekels. Wizz Air cancelled the flight, Issta refunded 911 shekels and kept the difference as a handling fee. A small claims court rejected his claim. The Tel Aviv District Court then rejected his appeal, Bizportal reported. The Supreme Court later agreed to hear a rare third-round appeal.

The deduction was 30 dollars. The Supreme Court ordered Issta to repay it with interest and linkage. It also ordered Issta to pay 5,000 shekels in legal costs, according to Ynet.

If a low-cost carrier cancelled on you, it is worth reading about what Wizz Air owes when it cancels a flight booked through an agency. That page explains what to chase, and from whom.

Why does Israel's Aviation Services Law decide this, not EU261?

Because the agency charges the fee, not the airline, Israeli consumer law sets the agency's duties here, not EU261. The Aviation Services Law requires the operator or organiser to return the full ticket amount. That includes fees, levies and taxes, within 21 days of a written request. Section 15 obliges the agency to approach the airline on the passenger's behalf, Mako reported. The court treated that as part of the service the agency already sold, not an extra job to bill for.

Regulation (EC) 261/2004, known as EU261, is a different instrument that still applies on top of any ticket refund. It sets fixed compensation of €250, €400 or €600 by distance. This applies to cancellations and arrival delays of three hours or more. The UK equivalent pays £220, £350 and £520. None of that changes here.

Money at stake	Who owes it	Effect of the ruling
Ticket refund after a cancellation	The airline, passed on by the agency	Must reach the passenger in full, with no handling fee
EU261 compensation: €250 / €400 / €600	The airline	Unchanged, and separate from the refund
UK261 compensation: £220 / £350 / £520	The airline	Unchanged, and separate from the refund

Getting your ticket money back does not use up the fixed payout: see how the fixed compensation sits alongside your ticket refund.

Does the COVID-era permission to charge a fee mean past deductions were legal?

The court said the opposite, and used the COVID-era rule as its reasoning. During the pandemic, a temporary regulation expressly allowed agencies to charge for this work, for a limited period. Justice Kanfi-Shteinitz reasoned that if the deduction had always been lawful, the legislature would not have needed to grant special permission for it.

The legislature allowed the fee explicitly and put a time limit on it. She held that the statute's later silence amounts to a prohibition, not a gap. That reasoning overturned two lower courts, which had reached contradictory results on the same question in earlier cases.

The reporting available does not spell out how far back the judgment reaches. No source reports whether agencies must repay fees withheld on cancellations years ago, or only those withheld going forward.

How much could Issta and other Israeli agencies now owe passengers?

Coverage of the ruling says the agency will have to return millions of shekels to customers, Ice reported. The scale matters because flight cancellations have been common, including for security reasons. Agencies applied the same deduction across a large number of bookings.

The dispute started over 30 dollars and ended as a precedent for passengers generally, TheMarker reported. Justice Barak-Erez added that agencies can price in advance for the possibility that they will have to help return money to a passenger.

Several things remain unclear. No source reports whether Issta or other agencies will refund withheld fees automatically, or will make each customer file a small claim. No one has published a timeline for those repayments. Issta, other agencies and the Israeli travel agents' body have not responded publicly.

What should I do if an Israeli agency deducted a fee from my cancelled-flight refund?

1. Find the booking confirmation and the refund notice, and work out the gap between what you paid and what the agency paid back.
2. Write to the agency. Name the flight, the cancellation and the amount withheld, and ask for an Issta handling fee refund or its equivalent at your agency.
3. Keep the written request, because the 21-day clock in the Aviation Services Law runs from a written approach.
4. Treat a travel agency commission on a flight cancellation in Israel as a separate issue from the airline's own liability, and claim both.
5. Check the flight itself, because a cancellation can also carry fixed compensation on top of the money back.

The quickest way to see whether the airline owes you more than the ticket price is to check whether your cancelled flight also qualifies for compensation. The 14-day notice rule and the refund-or-rerouting choice are set out in the refund rules a cancelled flight already carries under EU261. If your flight eventually departed but landed late, the three-hour arrival test is explained in our flight delay compensation guide.