Australian airline passengers are being treated like mugs

A recent ruling by the US Department of Transportation (DOT) has underlined just how negligent successive Australian governments have been in protecting us from the worst excesses of our airlines.

Australian passengers are not offered any of the protections or rights that American or European air travellers receive.Credit: Ap

In April 2024, the DOT implemented a rule requiring airlines to provide passengers with automatic cash refunds when airlines cancel or significantly change their flights, delay checked bags or fail to provide passengers with extra services they purchased.

A “significant change” is a flight that departs or arrives more than three hours behind schedule in the case of a domestic service or six hours on an international flight. The rule also applies if the flight departs from or arrives at a different airport from those scheduled, increases the number of connections, if passengers are downgraded to a lower class of service, or if an aircraft is substituted for another that is less accessible or accommodating to a person with a disability.

The new ruling also stipulates that passengers who file a mishandled baggage report will be entitled to a refund of their checked bag fee if it is not delivered within 12 hours of the arrival of their domestic flight, or 15-30 hours on an international flight, depending on the length of the flight.

Passengers who pay for an extra service such as Wi-Fi, seat or special meal selection or in-flight entertainment, will also be entitled to a refund of whatever fee they might have paid. No ifs, no buts, and the word “promptly” is attached to the ruling.

Under the Biden administration the DOT has taken an active interest in passenger rights, clawing back more than $US3 billion ($4.56 billion) in refunds and reimbursements owed to airline passengers and issuing more than $US164 million ($250 million) in penalties against airlines for consumer protection violations. Airlines are paying attention.

In the US, passengers will receive an automatic refund of their checked bag fee if it does not arrive within 12 hours of their flight.Credit: AP

In 2023, the rate of flight cancellations in the US fell to a low of less than 1.2 per cent, despite a record number of flights. In Australia, according to the Bureau of Infrastructure and Transport Research Economics, the flight cancellation rate in 2023 was 3.4 per cent for all Qantas flights and 4.2 per cent for Virgin Australia.

Meanwhile, the European Union enacted its Air Passengers Rights Regulation in 2004. Flights that operate within the EU, regardless of whether they are an EU or non-EU airline, or which depart from an EU to a non-EU country, are subject to European Commission Regulation 261. That sets the compensation for passengers whose flights arrive at their final destination three hours or more behind schedule at €250-€600 ($410-$980), depending on the distance of the flight and the length of the delay. Passengers whose flights are cancelled less than 14 days prior to the scheduled departure date are also entitled to compensation.

Australia’s airlines set their own compensation terms and conditions, and that’s the way they like it. Qantas has fought tooth and nail to nobble any similar moves to implement mandatory compensation for delayed or cancelled flights. In a December 2023 submission to the federal government’s aviation green paper Qantas warned that any move to compensate passengers for delayed or cancelled flights would increase ticket prices. This from an airline that posted a whopping $2.47 billion profit in 2022-23, helped along by soaring demand and high ticket prices.

If a flight is delayed for less than 12 hours and that requires an overnight stay, Qantas will provide $30 compensation per passenger for meals and $200 per room for a hotel booking. If it’s an overnight delay of more than 12 hours, the meal allowance increases to $50, however this only applies if the passenger is travelling from an airport that is not their home airport. If they live close to the airport, Qantas will provide a cabcharge voucher.

How our two major carriers game the slot allocation system

A slot is an agreement between an airport operator and an airline which allows the airline to operate take-offs and landings at a specific time and date. Only those airports where capacity is constrained use the slot allocation system. Slots are valuable for the successful operation of an airline.

Across most of the world, slots are allocated by independent authorities according to the International Air Transport Association’s Worldwide Airport Slot Guidelines. That’s the case in the EU and in the US, although in that country local airport authorities may review certain flights based on airport terminal capacity.

In Australia, a private company, the Airport Co-ordination Australia (ACA), allocates flight slots at the country’s eight busiest airports. Qantas owns a 41 per cent shareholding in ACA, Virgin Australia 35 per cent, and consumer regulators and airport management claim the domination by our two major carriers creates a duopoly that favours their own interests, strangles competition and keeps airline ticket prices high.

In order to retain its slots, an airline must use 80 per cent of the time, the so-called 80:20 rule. But an airline can cancel some flights without losing the slot, and that’s what Qantas was doing between May 2021 and July 2022 when it cancelled more than 8000 flights.

At the same time Qantas was selling tickets for those flights which it had no intention of operating, allowing it to maintain its existing slots that might otherwise have overstepped the 80 per cent rule.

In August 2023, the Australian Competition and Consumer Commission (ACCC) took the airline to court over the matter. In its defence, the airline’s legal team maintained that, “Qantas makes clear to ordinary and reasonable consumers that, while Qantas will do its best to get consumers where they want to be on time, it does not guarantee particular flight times or its flight schedules.”

The ACCC wasn’t buying it and this month the airline agreed to pay $120 million to settle the regulator’s lawsuit. The settlement will be split, with $20 million to compensate more than 86,000 customers who booked tickets on the cancelled flights, the remaining $100 million is a fine.

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