Aegean Airlines has formally apologised to the Palestine Liberation Organisation after the aviation firm faced a barrage of international condemnation.
The airline had allowed Jewish Israeli travellers to stop a flight departing until two Palestinian citizens of Israel had been thrown off the passenger jet.
The two passengers agreed to take a later flight from Athens to Tel Aviv after passengers "persistently and vocally complained", and demanded additional security checks, according to the Greek aviation company.
Senior Palestinian official Saeb Erekat said the passengers were treated with "discrimination and prejudice" and called upon the Greek government to compensate the passengers.
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Israeli Arab Member of the Knesset Hanin Zoabi had also called for Aegean Airlines to apologise.
"This case is a chance to show how it is easy for Europe and the whole world to be hostile towards Arabs, and subjugate them, while justifying these using claims of security fears," Zoabi said.
A passenger on the flight identified only as Nissim told Israeli Army Radio that one passenger appeared "suspicious". He said no one cited the passengers' ethnicity as a reason for their concerns, and said "no one was racist".
In a letter to Erekat, the airline's CEO Dimitris Gerogiannis said on Wednesday that he rejected "the possibility of discrimination".
"We would like to emphasise that our crew did try for more than an hour and thirty minutes to resolve the situation," he said.
"Unfortunately by the time that all the security had been rechecked, yes there was unwarranted and indeed unfair continued reaction by a large group of passengers, but also the two affected passengers did not feel comfortable to fly," read the open letter.
The airline declared that "we respect the rights of all passengers to travel without any effects of potential racial profiling".
Aegean's initial statement following the incident was not quite so apologetic.
"While it is indeed unfortunate that they were possibly racially profiling the customers, indeed their fellow Israelis... safety must be first," the company said.
Erekat said that the apology was to all Palestinian people, and that the Palestinian ambassador to Greece would meet with the head of the airline on Thursday.
"We appreciate that Aegean Airlines has given this serious issue serious attention, the Palestinian ambassador to Greece will follow up on this issue with Mr Georgins," Erekat said.