Qantas, Virgin argue against fixed compensation for customers of cancelled flights

Airlines laid out why they should not have to pay automatic compensation in the event of cancelled flights in a fiery Senate committee hearing.

Australia’s major domestic airlines Qantas and Virgin have argued against automatic compensation for passengers in the event of flight cancellations in a public hearing to examine the need for increased consumer protection.

Representatives of airlines, consumer groups and the infrastructure and transport department were among those to front the hearing of the Senate rural and regional affairs and transport legislation committee on Monday.

The hearing was convened to examine the Coalition’s “pay on delay” bill proposing Australia adopt a similar model of compensation for airline customers as the European Union.

But, most of the questions centred on the “aviation customer charter of rights” flagged by last year’s aviation white paper, to be overseen by a new ombuds scheme.

Nationals Senator Bridget McKenzie came out swinging, telling Qantas Domestic chief executive Markus Svensson the reason greater consumer protections were needed was because of the airline’s handling of Covid travel credits and sale of “ghost tickets”.

“Isn’t that the case and why we actually need a mandatory system to force you to do the right thing by your customers?” said Senator McKenzie.

Mr Svensson replied Qantas’ own policy was “very clear” on what customers were entitled to in the event of flight cancellations or significant delays.

Senator Bridget McKenzie says stronger consumer protections are needed for airline customers. Picture: Martin Ollman

Both Qantas and Virgin have opposed the Coalition’s “pay on delay” proposal but are supportive of an ombuds scheme and charter of rights, which do not force airlines to automatically compensate passengers for significant delays.

Virgin Australia general manager of government affairs Stephen Beckett said airlines in the EU had paid abut $9bn in compensation over the years, and in the same time cancellations had doubled.

“The type of performance you’re looking to improve is not connected to what is paid, and what’s not paid,” said Mr Beckett.

Mr Svensson argued airlines had enough incentive to operate to schedule, without the threat of having to compensate passengers for cancellations or major delays.

“A mandatory scheme for compensation does not improve customer protection,” he said.

“I lived for three years in Europe and I experienced this scheme as a consumer. It hasn’t improved (airline) performance in terms of cancellations and delays.”

Consumer advocates were adamant stronger protections were needed for airline customers than the charter of rights which was intended to run alongside “complex to navigate” Australian Consumer Law.

Consumer Champion Adam Glezer said there needed to be a concrete refund policy for all flight cancellations for whatever the reason, including major weather events.

He said as it stood, consumers were at the mercy of airlines which simply rebooked customers without any consultation.

“As an example, I was speaking to people who were going to one of the AFL games cancelled in Brisbane because of Cyclone Alfred,” said Mr Glezer.

“They were supposed to be going there for the game on the Thursday night but instead were given a replacement flight on the Monday. What do they need that for? They were going up for one reason, yet their airline is telling them ‘we’re looking after you’.”

Officials from the Department of Infrastructure and Transport told the hearing, an internal recruitment process was underway for the aviation ombudsperson with an appointment expected within weeks.

However it was likely to take much longer for the relevant legislation to be drafted, with laws unlikely to be introduced into parliament until 2026.

No decision had been made on the penalties airlines would face for breaching the charter of rights, including the right to prompt and fair remedies during and after cancellations, delays and disruption; the right to safe and timely baggage handling and the right to accurate, timely and accessible information and customer service.

Originally published as Qantas, Virgin argue against fixed compensation for customers of cancelled flights