The Haaretz daily said passenger jets flown by El Al, Israel's national carrier, and two other airlines are being fitted with new defense systems known as C-Music -- Commercial-Multi Spectral Infrared Countermeasure.
The system was developed by Israel's El-Op company, an electronics subsidiary of major defense contractor Elbit Systems. It claims C-Music, contained in pods fit onto airliners' fuselages, is the first commercially available airborne protection system for passenger jets and helicopters.
El-Op General Manager Adi Dar says C-Music uses lasers to blind the guidance systems of incoming missiles, rather than destroying them.
The company developed the system under a $79 million government contract to produce a missile defense system for Israeli commercial aircraft as part of its Sky Shield air transport defense plan.
El-Op declined to put a price tag on the system but the Israeli media has pegged it at $1.2 million per unit.
Despite the global terrorist threat from such missiles, known in the arcane parlance of the U.S. military as man-portable air defense systems -- MANPADS -- the civil aviation industry has shown little inclination to acquire anti-missile systems.
But the reported proliferation of Libyan missiles, plundered by rebels fighting Moammar Gadhafi's dictatorship during an eight-month civil war, has alarmed Israel's military.
U.S. and European companies have been seeking to develop an anti-missile defense system for airliners for years, with no commercial success even though there are some 6,700 commercial aircraft operating in the United States alone.
Israel was spurred into action on Nov. 28, 2002, when al-Qaida militants fired two Soviet-designed SA-7 Strela missiles at an Israeli Arkia Airlines Boeing 757 shortly after takeoff from Mombasa, Kenya. The plane was carrying 261 people, mainly holidaymakers heading home. Both missiles missed.
Binyamin Netanyahu, then Israel's foreign minister, called for urgent global action because "once planes start falling from the sky, we're going to be living in a very different world."
The first known incident using MANPADS against passenger aircraft occurred in Rome in 1973, when Palestinian Black September attempted to shoot down an El Al airliner with a portable missile.
There have been no reported instances of Palestinian radicals in Gaza firing MANPADS at Israeli aircraft, civil or military.
But the suspicion is they may simply be preparing for a major action and don't want to tip their hand that they have advanced weapons to challenge Israel's vaunted air supremacy for the first time.
Israeli civilian aircraft are unlikely to fly over Gaza but the Israelis main fear centers of the West Bank, from which SAMs could target aircraft using Israel's Ben Gurion International Airport outside Tel Aviv.
In Lebanon, on Israel's northern border, the Iranian-backed Hezbollah is widely believed to have acquired sophisticated surface-to-air missiles in large numbers, mainly from Iran and Syria, in recent years.
And the Shiite movement, which fought Israel to standstill in a 34-day war in 2006, is believed to have them in sufficient numbers to be a serious threat to the Israeli air force -- and possibly civilian aircraft as well.
Jane's Intelligence Review reported as far back as 2007 that Iran had provided Hezbollah with "an array of advanced weaponry."
This included Iran's own Misagh system, the Chinese OW1 and the Russian Igla-1, SA-2/2M and SA-3 Strela.
In March, 2007, Lebanese police seized at least three Strela-2s from the Syrian-backed Popular Front for the Liberation of Palestine-General Command.
Israel Aerospace Industries, flagship of the Jewish state's high-tech defense industry, developed a system known as Flight Guard some time ago, which was fitted to some Israeli aircraft.
But Haaretz said Flight Guard's "use of diversionary flares set off safety concerns abroad, and turned to C-Music." U.S. and European civil aviation authorities refused to certify the system.
The U.S. Rand Corp. says as many as 40 civilian airliners worldwide were downed by MANPADS from 1975-92, killing 760 people.
Figures for the number of missing Libyan SAMs vary widely. Gen. Mohammed Adia of the National Transitional Council forces said Oct. 2 "about 5,000 of the 20,000 SA-7 Strelas bought by the regime are missing." U.S. officials put the figure closer to. 20,000.