Wow. I'm really surprised by the comments of 'technically nothing' or similar. I see this as broken contract and therefore completely up for negotiation between the parties.
But this is the problem. The 'technically nothing' comes from the fact that there are no guidelines or mandated law which specifies
how the restitution due to the customer, if any, is supposed to be calculated. I'll concede that part of the contract was broken (or, let's just say, "it was broken" - simpler), but
now how do we determine the fairness of compensation? (Mind you, for a given customer and company, even with a situation like this, it is conceivable, though not applicable to this case and only remotely possible, that an apology with no financial compensation could be regarded as "fair").
Consumer law may argue simply that if you don't receive what you were advertised to get, you are eligible for a refund. I can understand that for something like goods (e.g. if your laptop was supposed to have 2GB RAM but it was sold to you with only 1GB, you can claim a refund). I'm not sure how it translates to things like services (e.g. if you get your carpet cleaned for 3 rooms but the guy only cleans 2, do you get a refund for all 3 rooms or do you get a refund for 1 room which wasn't cleaned?). Then, airlines are another beast.
Across the world, no jurisdiction has a good grasp on this one. Only some aspects are well protected, e.g. in the EU there are set guidelines on compensating passengers who are delayed or displaced due to cancellation, overbooking etc., plus other care provisions. The US DoT has some consumer protections with respect to pricing and other aspects (for example, but notwithstanding, the latest United Airlines 4 mile HKG ticket debacle).
In this case, the OP only received
part of the product offered (i.e. a ticket to go from SYD to LHR return, via AUH, on EY Business Class). Had the OP received absolutely nothing (e.g. cancelled flight, bumped with no rebooking) then a full refund is due. It might be arguable for a full refund if the OP had SYD-AUH in Y rather than J, in spite of otherwise 3 flawless sectors (otherwise, a substantial compensation due, owing to a serious failure of product delivery, viz. wrong class, rather than just this case of a malfunctioning seat and so on; note also that there is a big difference between if the OP had
actually flown Y as opposed to if the OP had flown something
similar to Y).
All in all, the common argument of just taking the 25% is a risk most of us are saying is acceptable only because negotiating a higher amount may be too difficult to achieve. The legal avenue to exact a higher compensation is not without risk (unless you can file it in VCAT, apparently). There's also a time-cost benefit here to keep in mind. Finally, notwithstanding a more serious failure of product, I think most of us would be surprised to exact a compensation as high as 25% out of an airline so quickly without legal action.
We're not telling the OP that they have no other recourse (legal included) if they aren't happy with the offer of compensation, but then the OP did ask for our opinion of "fairness" of the best offer so far.
It can be difficult where a flight did complete (and wasn't cancelled), but in the background of the existing discussion with the airline I'd feel out the CC provider in relation to a charge-back. If you are successful with a charge-back it puts you in a much better bargaining position. In my mind a service was provided, but the contractual breakdown was that the service _sold_ was not provided. So, probably some common ground in paying something for the leg that was affected but how much really depends on the two parties negotiating it out.
If you feel you got an economy product, on balance, then I'd pay that. If you felt it was below even economy (and be fair in your mind about this) then sure, negotiate for less.
This is more interesting as I hadn't thought about instigating a chargeback. For chargebacks the onus is on the company to prove that they deserve the money (i.e. delivered on the goods or services as paid by the OP). I have no experience how this process exactly works and whether there is any risk on the side of the OP (especially if, though difficult to unlikely, EY can prove to the credit card company that they delivered the product as paid).
