Ben Shimon v. Issta Israel — Supreme Court barred travel agencies from deducting handling fees from canceled-flight refunds

Case
Doron Ben Shimon v. Issta Israel Ltd.
Court
Supreme Court of Israel (Israel)
Judge
גילה כנפי-שטייניץ (Judicial Selection Committee, chaired by Justice Minister Gideon Sa'ar, 2022)
Date Decided
October 5, 2026
Citation
LCA 58313-09-25
Topics
Air Travel, Consumer Protection, Flight Refunds, Travel Agencies

Background

Doron Ben Shimon purchased a Wizz Air ticket to Warsaw through travel agency Issta for NIS 1,087. After Wizz Air canceled the flight, Issta obtained the refund but initially remitted only NIS 911. It said that it had deducted a reduced handling fee of $30 under contractual terms permitting a fee for cancellations initiated either by the passenger or the airline, and that Wizz Air had not returned another $17.

Ben Shimon sued in small-claims court for the balance. Issta agreed to pay the disputed $17, leaving only the $30 handling fee at issue. The small-claims court upheld the deduction, and the Tel Aviv-Jaffa District Court denied permission to appeal, reasoning that a travel agency could charge such a fee when expressly authorized by contract. The Supreme Court granted third-instance review because lower courts had reached conflicting results on this recurring consumer-law question.

The Court’s Holding

The Supreme Court unanimously allowed the appeal and held that, under the Aviation Services Law (Compensation and Assistance for Flight Cancellation or Change in Conditions), 2012, a travel agency may not deduct a handling fee from money refunded after an airline cancels a flight. The airline must refund the full amount paid for the ticket, and section 15 imposes a mandatory duty on the agency, when requested, to assist the passenger in obtaining that statutory benefit. Because section 17 permits contracting around the Law only for the passenger’s benefit, a contractual term authorizing the deduction cannot validate it.

The Court distinguished a temporary COVID-19 provision that had expressly allowed agencies to deduct agreed service fees while requiring prompt transfer of refunds. That provision changed the preexisting law rather than merely clarifying it; once it expired on March 31, 2021, the temporary authorization expired with it. The Law’s text and consumer-protection purpose likewise require an agency that receives refund money to pass it to the passenger without diminution.

The Court stressed that an agency does not guarantee collection and need not pay from its own funds any amount the airline failed to return. But once the agency receives refund money, it may not retain part of it as compensation for performing its statutory assistance duty. The Court vacated the lower-court judgments and ordered Issta to repay the deducted fee with statutory linkage and interest from the filing date, plus NIS 5,000 in costs.

Key Takeaways

  • A travel agency must pass along the full canceled-flight refund it receives and may not deduct a handling fee.
  • Passenger consent in standard contractual terms does not cure the deduction because the Aviation Services Law may be varied only in the passenger’s favor.
  • The expired COVID-19 authorization for agreed handling fees was a temporary change in law, not evidence that such deductions remain permissible.

Why It Matters

The decision resolves conflicting lower-court rulings on a question affecting many passengers amid frequent flight cancellations. It establishes that travel agencies act as intermediaries for statutory refunds and cannot reduce the passenger’s entitlement while transmitting the money.

Agencies may account for the cost and risk of refund assistance when pricing their booking services, as Justice Daphne Barak-Erez observed, but they cannot recover those costs by withholding part of a refund after an airline-initiated cancellation.

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