Government leaves door open to refunds for airline passengers under new scheme

1 week ago 3

Australians fed up with flight delays and cancellations are set to win new rights, with the federal government leaving the door open for refunds under a landmark aviation consumer protection scheme.

Transport Minister Catherine King on Monday opened public consultation on the “Australian-first” reforms, which would set national standards for how airlines must treat passengers when flights are disrupted.

“For the first time, Australia will have a national aviation consumer protection regime with enforceable standards that airlines and airports must meet,” King told journalists in Melbourne.

“When your flight is delayed, you’ll be entitled to a prompt refund so you can make a decision about what to do next. And if your baggage goes missing, passengers will get proper redress – not just a brush-off.”

Federal Transport Minister Catherine King announces a national aviation consumer protection scheme at Melbourne Airport.

The minister flagged that cash compensation remained an option for those customers whose flights are delayed or cancelled due to reasons under an airline’s control.

“We’ve had to balance immediate redress with keeping ticket prices affordable,” she said. “If this scheme doesn’t work, we haven’t ruled out going further.”

Consumer advocates have long argued Australia lags Europe and the US, where strict compensation rules mean airlines must reimburse passengers in cash, not travel credits, for lengthy delays or cancellations.

Currently, airlines decide their own compensation rules, leaving travellers facing a lottery of refunds, rebookings or hotel vouchers. Under the proposed scheme, passengers would have guaranteed access to prompt rebookings, refunds, food and accommodation.

A new ombudsman and regulator would also be created to handle complaints when disputes with airlines cannot be resolved directly.

“For too long, travellers have been left frustrated when they can’t get an outcome. This will be the first time they can take complaints to a dedicated aviation ombudsman.”

The announcement follows a bruising period for the sector. Qantas has faced fierce criticism over record profits while customers endured cancelled flights, lost luggage and poor service. Last year, the airline admitted to selling thousands of tickets on already-cancelled flights, prompting an ACCC investigation and a shake-up of its leadership.

Rival carriers Virgin and Bonza have also battled reliability issues, fuelling public anger at an industry that many say puts profits ahead of passengers. Bonza collapsed into administration in 2024, leaving hundreds of staff and more than 70,000 customers owed money.

A Qantas spokesman said the airline supports the development of the scheme and charter and “looks forward to working with the government as it develops these”. A spokeswoman for Virgin Australia also said it would engage constructively with the government on the scheme.

“We recognise the importance of consumers having trust and confidence in the aviation industry,” she said. “We will review the draft proposal released for consultation and welcome the opportunity to work closely on the framework for Aviation Consumer Protections.”

Consumer advocates have long argued Australia lags Europe, the US and Canada, where strict compensation rules mean airlines must reimburse passengers in cash, not travel credits, for lengthy delays or cancellations.

Virgin became the highest-profile listing on the ASX this year, with a market capitalisation of $2.3 billion.Credit: Luis Enrique Ascui

In Europe, the EU’s long-established Air Passenger Rights Regulation guarantees compensation of up to €600 ($1071) for cancellations and long delays, along with mandatory care such as meals and accommodation. In the United States, airlines are legally required to provide refunds if a flight is cancelled and the passenger chooses not to travel and, following sustained public pressure, several major US carriers recently strengthened commitments to cover meals and hotels during disruptions.

Canada also introduced an Air Passenger Protection regime in 2019, setting out strict rules for compensation, refunds and duty-of-care obligations.

By contrast, Australia has no national framework, with each airline setting its own policy.

A spokesperson for the transport department, which has been working on the implementation of the white paper and creation of the ombudsman scheme over the past year, said it had been looking at how consumer protection and complaints handling schemes in other sectors in Australia operate.

“We also considered and benefited from regular engagement with Canada on how they’ve managed their scheme and complaints processes and what they’ve learnt over the past few years of operation,” the spokesperson said.

“As part of this process we have been considering international experience and stakeholder feedback on the draft Aviation Customer Rights Charter to develop further detail relating to minimum standards for airlines and airports, giving consumers greater certainty about what they can expect when flights are cancelled, delayed, and disrupted, including the availability of refunds and passenger assistance.”

Submissions on the draft scheme will remain open for four weeks. The government says it wants to hear from ordinary travellers before finalising the new standards.

“I don’t think anyone believes every passenger experience is perfect,” King said. “This scheme is about setting clear standards and holding airlines and airports accountable.”

While Australia’s aviation sector has been boosted by the recovery of Virgin Australia, including its relisting on the ASX earlier this year, competition and the health of smaller carriers is less clear.

Rex airlines has continued operating its regional flights for more than a year of being in administration, thanks to continued Commonwealth assistance and the looming prospect of the government acquiring the airline if no buyer can be found.

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