Aviation White Paper Lets Down Australian Consumers

Virgin Australia A330 taxies past Qantas planes at Sydney Airport
The Aviation White Paper proposes some welcome reforms, but doesn’t go nearly far enough to protect Australian consumers. Photo: Jonathan Wong.

The Australian government has proposed a new Aviation Industry Ombuds Scheme in its Aviation White Paper, released this week. While it’s a welcome step in the right direction, it falls well short of what’s truly needed to protect Australian consumers.

In total, the long-awaited Aviation White Paper proposes 56 new policy initiatives across different areas of the Australian aviation industry. Ten of these policies are aimed at creating “a better passenger experience”.

In this article, we take a closer look at what the Aviation White Paper proposes to do for Australian airline customers – and just as importantly, what it doesn’t do.

The White Paper acknowledges some existing consumer issues

The government acknowledges in its Aviation White Paper that airlines are cancelling too many domestic flights. It also says that it’s too hard for customers to access refunds when entitled to them, and that the Airline Customer Advocate is grossly inadequate.

Too many domestic flights are getting routinely cancelled
Too many domestic flights are getting routinely cancelled. Photo: Matt Graham.

This is what the Aviation White Paper says about these issues:

Since the reopening following the COVID-19 pandemic, the aviation sector has not provided the level of service Australians expect and are entitled to. In 2023, one in every 27 domestic flights were cancelled and almost one in 3 were delayed arriving, noting some improvements in the first half of 2024.

When flights are cancelled or delayed, customers have found it too difficult to enforce their consumer rights. Airlines have taken too long to respond to customer inquiries, and the industry-established Airline Customer Advocate has proven ineffective in supporting customers to resolve complaints.

This is all true. However, despite talk from the Minister about “delivering for consumers”, the actions that the government is proposing to fix these and other issues don’t actually do that much for consumers.

What Australian Frequent Flyers wanted

The Australian government sought submissions last year on its Aviation Green Paper, which was the precursor to this week’s White Paper. Australian Frequent Flyer made a formal submission to this process based on the feedback of the AFF community.

When we asked for feedback last November, AFF members overwhelmingly said that they wanted three things:

  • An independent ombudsman to replace the Airline Customer Advocate
  • Minimum standards of treatment for airline passengers
  • A European-style compensation scheme requiring airlines to pay financial compensation for lengthy delays, involuntary downgrades and overbooking for reasons within the airline’s control

Does the White Paper deliver on these things?

The good news is that the White Paper does provide an industry ombudsman. However, it will probably be funded by the airlines and have limited actual enforcement powers.

The White Paper also promises a new Aviation Customer Rights Charter. But that’s mainly designed just to help consumers understand the rights they already have under existing laws.

Unfortunately, the government’s 2024 Aviation White Paper completely ignores the loud calls from consumer advocates, including CHOICE and even the ACCC, for a financial compensation scheme similar to EU261 in the European Union. Not only has the government failed to explain why it won’t consider this – the report doesn’t even mention the fact that many consumer groups have specifically called for this.

This is highly disappointing because a compensation scheme would have done more to protect Australian flyers than any other proposal.

Finnair E190 and a Lufthansa tail at Berlin Brandenburg Airport
The European Union has a fairly effective airline compensation scheme. Photo: Matt Graham.

Proposed policies to improve the passenger experience

The full Aviation White Paper is available to read on the Department of Infrastructure, Transport, Regional Development, Communications and the Arts website.

For those who don’t have time to read the whole 234-page document, here’s a summary of the policies the government is proposing specifically to improve the passenger experience:

  1. Establish an Aviation Industry Ombuds Scheme
  2. Establish a new Aviation Customer Rights Charter
  3. Adopt a “show cause” arrangement that requires airlines to report accurate reasons for cancellations and delays
  4. Create new aviation-specific disability standards
  5. Require airlines to coordinate with airports to ensure disabled passengers can navigate through the passenger journey
  6. Require airlines to offer “passenger assistance profiles” where passengers can store information with the airline about special needs like assistance animals and wheelchair batteries
  7. Review airline policies that impose a maximum number of passengers per flight that can request wheelchair or other special assistance
  8. Review industry compliance with the new disability standards
  9. Produce user guides that outline the new disability standards
  10. Provide improved remedies for damage to wheelchairs and other mobility devices

As you can see, many of these policies are aimed at improving the travel experience for passengers with disabilities. But the first three “passenger experience” policies specifically relate to consumer protections during irregular airline operations.

How the Aviation Industry Ombuds Scheme will work

Despite the White Paper’s shortcomings, the new Aviation Industry Ombuds Scheme will at least almost certainly be better than the existing Airline Customer Advocate.

The government has just begun a consultation period to get feedback about its plan for an Aviation Industry Ombuds Scheme. Submissions close on 17 October 2024. The government will consider the outcomes of this consultation by early 2025, and plans to enshrine this scheme into law by 2026.

The scheme applies to both domestic and international airlines operating in Australia, and the ombudsperson would have the power to:

  • Provide an external dispute resolution service
  • Direct airlines and airports to provide specific remedies to customers
  • Give public information to customers on airlines’ and airports’ legal obligations
  • Publish reports on airline and airport conduct
  • Request additional information from airlines about the reasons for specific delays and cancellations
  • Recommend policies to the federal government
  • Refer systemic misconduct to the ACCC

The government says the scheme will be similar to the current industry-funded Telecommunications Industry Ombudsman (TIO).

New Aviation Customer Rights Charter

The Aviation Industry Ombuds Scheme will also create the new Aviation Customer Rights Charter which outlines the industry’s obligations to customers.

The purpose of this is to clarify the minimum standards that airlines must abide by. But the charter won’t actually create new legal protections for consumers. It will merely communicate the rights that are already available to consumers under the existing Australian Consumer Law and other legislation.

The charter would describe the conduct that the ombudsperson expects from airlines and airports on issues such as:

  • Customer refunds
  • How long a flight can be delayed before it’s unreasonable
  • Which types of disruptions are and are not within the airline’s control
  • Standards for communication with passengers
Boarding for QF27 at Sydney Airport
The Customer Rights Charter will outline what passengers are already entitled to. Photo: Matt Graham.

Possible changes to Australian Consumer Law

Although the Customer Rights Charter itself won’t strengthen the legal rights of consumers, the White Paper says that the government will consult on other reforms to Australian Consumer Law that strengthen consumer guarantees. This will include a “civil prohibition for failure to provide a consumer guarantees remedy”.

“Many consumers are not willing to enforce their rights in a court or tribunal and that, even when they do, the supplier’s refusal to provide a remedy is not a contravention that attracts a penalty,” the White Paper says.

In other words, the proposed Consumer Law changes should force airlines (and other aviation industry businesses) to simply meet their existing legal obligations. It’s kind of incredible that this wasn’t already the case.

No financial compensation scheme

Unsurprisingly, airlines lobbied hard against a financial compensation scheme similar to EU261 (which some had dubbed “AU261”).

Some of the arguments used by airlines to fight against this proposal were, in my personal view, illogical and misleading. Nonetheless, as we saw last year when the federal government blocked Qatar Airways’ application for more flights into Australia, the government has again bowed to the interests of Australian airlines at the expense of consumers.

Qantas Boeing 737-800s at Brisbane Airport
Qantas lobbied especially hard against an “AU261” compensation scheme. Photo: Matt Graham.

The EU261 model has been highly successful in Europe because it provides real incentives for airlines not to make commercial decisions that could screw over customers. Airlines only have to pay up if they delay, downgrade or bump a passenger for reasons within the airline’s control. So it doesn’t punish airlines for delays due to weather, air traffic control or other external factors. And it’s fair to consumers because they often incur a real financial cost (as well as the inconvenience) when they are significantly delayed.

The White Paper does say that the government wants to make it easier for customers to access refunds from airlines, when they’re entitled to them. However, the emphasis solely on refunds for cancelled flights ignores the fact that customers may need to buy expensive last-minute replacement tickets on other airlines. These often cost much more than the original ticket price. Customers affected by last-minute cancellations will still be out of pocket for this.

Even if an “AU261” scheme increased airfares slightly, it would result in a far more reliable and customer-friendly aviation industry in this country. Besides, any money that airlines would need to spend on compensation payouts would go back to customers.

Response from the Transport Minister

Australian Frequent Flyer reached out to the Department to ask why it did not consider calls for an airline compensation scheme. They referred us to the answers given by Transport Minister Catherine King at a media conference on Monday.

When asked by a journalist if the government was open to a European-style compensation scheme, King responded that the ombudsperson may recommend compensation and that the government has not ruled it out. But she added that she believed the Aviation Industry Ombuds Scheme “provides a better opportunity for continuous improvement”.

King was also asked by a journalist if Qantas and Virgin had warned her that a “bigger stick” approach with more requirements, such as a compensation scheme, would be damaging. This was King’s response to that question:

I haven’t had conversations with Qantas and Virgin about that. They may have views that they have expressed through the submission process of the Aviation White Paper. But what I would say is one of the considerations, of course, that I had to take into account is whether airlines would risk factor in– and you know, potentially, risk factor in that could lead to higher airfares. I’ve obviously had to have a look at that, and that’s one of the factors I’ve brought into consideration. But the ombudsperson will have the opportunity to say whether compensation should be paid if there’s been an unreasonable breach in terms of the consumer law.

The Aviation White Paper is a big win for airlines

The fact that Australia’s airlines have welcomed the Aviation White Paper with open arms, even though it may require them to fund a new ombudsman, speaks volumes. It tells you everything you need to know about whether airlines or consumers are the real winners.

The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 90 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.
________________________

Related Articles

Community Comments

Loading new replies...

better scrutiny for airlines and airports would be enforced

Hilarious.

Reply 2 Likes

abc.net,au Airline 'Charter of Rights' to establish refunds for delayed or cancelled flights

In short:
The federal government will establish a charter of rights for airline customers to seek compensation for delays and cancellations.
The charter will be introduced in the government's aviation white paper.

What's next?
The scheme is expected to be operational by 2026.

The details will be interesting.
Doubt if will be EU261 types rules.

Reply Like

Yes, the White Paper is out today and we can all read and have our 2 cents of input.

It's a start and an Acting Ombudsman starts today.

Reply 3 Likes

abc.net,au Airline 'Charter of Rights' to establish refunds for delayed or cancelled flights

The details will be interesting.
Doubt if will be EU261 types rules.

The Govt has already said it's not going to be an EU rules type set up, but more like the Banking Ombudsman.

Reply 3 Likes

abc.net,au Airline 'Charter of Rights' to establish refunds for delayed or cancelled flights

The details will be interesting.
Doubt if will be EU261 types rules.

Canada’s system is pretty much toothless. Delays for weather are considered outside the airline’s control (not just extraordinary weather events, like europe), and delays due to maintenance on the day of travel are also excluded.

So pretty much zero avenue to claim :(

Reply 1 Like

How to be seen doing something, whilst actually doing very little.

Reply 18 Likes

I assume the ombudsmen and staff will be treated nicely to CL (and Virgins' equivalent) access?

Reply 7 Likes

A frustration of mine is overbooking. It’s a non negotiable when it comes to a scheme like this, and enabling significant compensation. Being bumped by Jetstar and given a $100 voucher and put on a flight a few hours later isn’t acceptable. By being the last to online checkin to whatever, and being a victim, with such rubbish compo, is a disgrace. A321 downgrades, and pushed to a much later flight, also, not my problem.

Any Compo scheme would make an airline work harder, that is a good thing. It would mean they need to invest in decent rostering platforms, better customer digital platforms, and better people planning.

<redacted>

Reply 2 Likes

Looks like the White Paper is out, I can see there's a lot of "The Australian Government will consult/review/consider/report" rather than concrete details.

We might be waiting a while to find out more around this.

Reply Like

click to expand...

Looks like the White Paper is out, I can see there's a lot of "The Australian Government will consult/review/consider/report" rather than concrete details.

We might be waiting a while to find out more around this.

Yes. Interim ombudsman to be appointed 2025. They’ll have a year to work on the details. So maybe 2026!

Reply Like

click to expand...