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