Too tired to read through this thread, but Ive never seen a NYC-TLV flight with less than 90% load, and rarely with less than 100%. I do think Elal had a real loss on this, albeit I doubt they shoulder it themselves. At any rate the law in this case is specifically designed to penalize airlines for mistakes (or at least that's my understanding of it).
Obviously this is based on my personal experiences, please post your constructive arguments.