UPDATE 5-Airlines agonise over safety risk of Israel flights

(Adds comment from CEO of travel assistance service platform in paragraph 21)

By Anna Ringstrom, Bart H. Meijer and Tim Hepher

STOCKHOLM/AMSTERDAM, Oct 12 (Reuters) - Airlines wrestled with the safety risk of evacuation operations in Israel on Thursday, with carriers including Dutch KLM cancelling flights while sister airline Air France mounted a special relief flight chartered by the French foreign ministry.

Airlines have faced warnings over insurance coverage in the wake of the weekend attacks on Israel by Palestinian Hamas militants, which have been followed by Israeli retaliatory strikes and growing concerns among some airlines and insurers over the security of airspace near Tel Aviv's airport.

Ben Gurion Airport this week denied a Hamas statement that the Palestinian faction had hit it with rockets from Gaza.

Reports say almost all rockets fired at Tel Aviv have been intercepted by Israel's Iron Dome system and none have landed at the airport itself, located just outside the city.

But airlines remain nervous about using the airport without stronger guidance and at least one foreign carrier, Norwegian Air, said its insurers had refused to provide cover, forcing it to cancel a planned evacuation flight.

"The reason is that the insurance company that Norwegian and a number of other airlines use no longer cover flights to Tel Aviv," Norwegian said, without elaborating.

Norwegian later said it had scheduled a new flight on Friday from Eilat in southern Israel in cooperation with Norway's foreign ministry.

Insurance industry sources say insurers are telling airlines they may review their existing policies, though one broker told Reuters they were not yet aware of any cancellations.

Israel's parliamentary finance committee meanwhile approved a plan to provide a state guarantee of $6 billion to cover insurance against war risks to Israeli airlines.

The framework will grant Israeli airlines cover against war risks, thereby ensuring the continuity of air operations.

Foreign airlines have struggled to find a common approach and the head of European budget giant Ryanair said it was up to governments to plot the way forward.

In one example, Dutch KLM said it had retracted an offer to the Dutch government for a recovery flight, because it was "not sufficiently possible for a civilian airline to conduct a flight that's safe for crew and passengers."

But sister airline Air France which has cancelled commercial flights, pressed ahead with an emergency evacuation flight chartered by the French foreign ministry on Thursday.

The two airlines are owned by the same parent group Air France-KLM but are operationally separate.

Air France-KLM CEO Ben Smith said the mission using a Boeing 777-300ER aircraft, one of the largest long-distance jets in the airline's fleet, was operating under a special exemption.

PATCHY RESPONSE

Germany's Lufthansa said it was sticking to its plans for evacuation flights on Thursday and Friday, while continuing to ground commercial flights to Israel.

Responses to the surging violence between Israel and Palestinian militants have been patchy with some airlines promptly cancelling flights and others, including Dubai's Emirates, a major long-distance carrier, maintaining links.

On Thursday, however, Emirates said it was suspending all flights until Oct 20, after halving them a day earlier.

In the United States, Delta Air Lines CEO Ed Bastian said the airline was adding capacity to Europe to take out those who had ended up stranded there, but had no plans to fly to Israel, whose airspace was "unsafe for a U.S. carrier".

The decrease in flights has left travellers who purchased individual insurance in case of emergencies with few options to find a way home.

"There's a ripple effect and chaos coordinating different flights to get travellers home," said Sasha Gainullin, the CEO of Robin Assist, a round-the-clock travel assistance service platform. "The level of intensity of trying to figure things out reminds me of September 11th."

All airlines said they were in touch with authorities and putting safety above all else.

The International Air Transport Association said it had held a security call with global airline members this week.

"We are monitoring the situation and encourage airlines to be in touch with their own governments and assess the risk. We do believe that airlines are taking all the precautions that they should," Rafael Schvartzman, European vice-president for IATA, told the AJPAE French aerospace media association.

Regulators in Israel, Europe and the United States have advised airlines to use "caution" when flying through Israeli airspace - avoiding a split seen in 2014 when the U.S. Federal Aviation Administration briefly banned U.S. airlines from flying to Israel after a Hamas rocket fell near Ben Gurion.

The decision triggered a backlash in the United States where critics accused the then Obama administration of impeding ties with Israel, something U.S. officials strongly denied.

It also opened a rift with European regulators who issued a softer recommendation not to fly to Israel.

In the current crisis, however, some airlines and industry groups have called for more specific direction.

A senior industry source involved in security discussions said airlines wanted above all to avoid inconsistent advice.

"Operators should especially avoid Tel Aviv, despite assurances from the authorities that the airspace is safe. It sure as hell isn't," OPSGROUP, a membership-based organisation that provides advice to pilots, said in a weekly bulletin.

(Reporting by Anna Ringstrom, Bart H. Meijer, Tim Hepher, Joanna Plucinska, Julia Payne, Carolyn Cohn, Steven Scheer, Rajesh Kumar Singh and Doyinsola Oladipo, Writing by Anna Ringstrom, Tim Hepher, Editing by Terje Solsvik, Deborah Kyvrikosaios and Diane Craft)