Israel’s Ministry of Finance has announced that it opposes the compensation plan for passengers stranded abroad during the Iran operation in June. According to the main proposed outline plan, each passenger will receive compensation of $150 for five days, and a total of up to $750 per passenger, with two days being paid by the airlines and three additional days by the state. Today, the fourth discussion on the subject took place, with the Ministry of Finance announcing that it opposes the plan, and the decision passed onto Prime Minister Benjamin Netanyahu.
At the end of the discussion, members of the Knesset Economics Committee unanimously approved the proposed resolution of committee chairman, MK David Bitan. He said, “The decision of the Minister of Finance to oppose providing any compensation as part of a specific outline plan for the aviation industry is an unreasonable decision under the circumstances. We demand, unanimously, that the prime minister himself gets involved, as needed by the circumstances and the dispute between the Ministers of Finance and Transport, and lead us to a fair and appropriate compensation outline without delay.”
What is the significance for passengers and airlines?
Estimates are that between 150,000 and 200,000 Israeli passengers were unable to return home when Israeli airspace was closed during Israel’s operation in Iran. Airlines reported huge losses during the operation.
Arkia CEO Oz Berlowitz said during a previous Knesset Economics Committee discussion. “The company has received loads of claims, and we will transfer them to the state as a third party.” This means: If passengers who sued the company receive compensation, Arkia will ask that the state bear responsibility for this, claiming that it had caused the damage when it closed airspace. This is a legal process that means that if the state does not form a compensation plan, the airlines will go to court.
Adv. Raz Nizri, who represents Arkia, adds “There are costs to these claims, which will ultimately be borne by the state, and delaying the process will cost much more. It seems strange to me that the chairman asked for a plan, and nothing has happened after a week and a half.”
The lack of agreement between the Ministry of Finance, the Ministry of Transport and the Economic Affairs Committee leaves the passengers who were stranded during the Iran operation, and the airlines, in legal and economic limbo. Without a dedicated compensation plan, the existing law, which has not been adjusted to an exceptional situation in which airspace is closed for such a long time, remains the only framework for regulating rights, thus exposing airlines to a wave of claims from passengers stranded abroad.
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Minister of Transport Miri Regev refuses to limit compensation to two days, as demanded by the Ministry of Finance, and airlines are already signaling that they will go to court, claiming that the damage was caused by a government decision.
Passengers seeking compensation must meanwhile independently file claims with the airlines, which have a clear interest in delaying the decision until they reach agreements on an adjusted plan.
Published by Globes, Israel business news – en.globes.co.il – on August 11, 2025.
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