Qantas warns government on mandatory compensation for delayed, cancelled fights

The aviation giant is warning of fallouts linked to any government proposal to mandate compensation for travellers impacted by its delays or cancellations.

Australia’s largest airline Qantas warns airfares will need to be increased and marginal routes could be at risk if the government moves to introduce a mandatory compensation scheme for delayed or cancelled flights.

In the airline’s response to the Federal government’s Aviation Green Paper, Qantas said the proposal to introduce a mandatory compensation scheme does not address the core drivers of delays and cancellations and that making knee-jerk reactions in light of post-Covid services failures risked unintended consequences.

It also slammed Australian airports as “effectively unregulated monopoly infrastructure” lacking checks and balances on their conduct around contract negotiation.

Qantas Group chief corporate affairs officer Andrew McGinnes said that the aviation industry needed guardrails for airport price setting and more efficient regulation.

“Qantas’ own service standards have improved a lot since the post-Covid restart and we know there is still more work to do,” he said.

“Our submission calls for careful thought around permanent policy changes in response to what was an unprecedented and temporary shock for the aviation industry as it came through the pandemic.”

Travellers have been hit by delays at airports due to delays and cancellations by all the major operators. Picture: David Clark

The airline said that delays and cancellations already represented a significant cost and would lead to higher fares and make marginal routes less sustainable if mandatory payouts were required.

In the past financial year, the profit margin on a Qantas turboprop flight was 7 per cent compared to 13 per cent for airport charges and 22 per cent for labour.

When operational problems occurred, Qantas said it routinely shifted aircraft and therefore cancelled flights on high-frequency routes like Melbourne-Sydney or Canberra-Sydney to preserve lower-frequency routes to regional centres that don’t have hourly services.

“Qantas recognises the impact that delays, cancellations and a range of other operational issues had on travellers during the post-Covid restart. Service levels during this time were a far cry from the standards the group traditionally delivered. While there is still work to do, there has been a significant improvement to operational performance,” the submission said.

It said that measures similar to the European Union would unlikely improve on-time performance. The EU regulation covers all flights departing from the region and sets compensation, refund or rerouting by the airline in the event of delay, cancellation or denied boarding. It does not cover weather related events.

Qantas confirmed its broad support for reform to the slot system at Sydney Airport and again rejected suggestions it was hoarding slots at the airport. The airline also described Australian airports as unregulated monopoly infrastructure lacking checks and balances on their conduct around contract negotiation.

It listed examples that it described as “airports behaving badly” including unfair terms at Canberra Airport and the lack of compensation from Sydney Airport in the event the airport is forced to shut. Hobart Airport was accused of lacking in good faith over fixed charges and Qantas said airports had threatened the airline about the loss of lounge access and other impacts as part of contract renegotiation.

Where revenue from a regional turboprop flight goes. Picture: Qantas.

The airline wanted to have access to an independent and binding dispute resolution to deliver reform and mandate the Aeronautical Pricing Principles (which are non-binding and routinely ignored) across all airports.

Qantas also wanted a more “balanced approach” to aircraft noise at airports with reform to Sydney Airport’s curfew for freight flights and incentives whereby flying quieter aircraft could facilitate increased movements and avoid operating restrictions.

It added that overnight freight operations at Sydney Airport had not been updated since 1995 and only allows two aircraft types including the BAE-146 which was designed in the 1970s and ceased production in 1993.

Qantas said there were more modern, quieter aircraft in the Qantas Freight’s fleet and modernisation of these regulations would deliver better noise and emissions outcomes, particularly ahead of the curfew-free Western Sydney Airport opening in late 2026.

The Aviation Green Paper is seeking feedback on aviation matters including competition and consumer protections, but also maximising aviation’s contribution to net zero and the future shape of the industry’s workforce.