No Refunds Fare Rule
costs Jetstar $1.95 m
Budget airlines sell cheap airfares by not including
‘extras’. The basic Jetstar ‘Starter fare’ includes only a
seat and carry-on baggage.
If a passenger wants ‘extras’, they can ‘customise their
flight’ by purchasing a more expensive fare with a ‘flight
bundle’ which might include checked baggage, in-flight
entertainment, food and flight flexibility, and the right to
receive a refund for a delayed or cancelled flight.
With Jetstar, fares with a ‘flight bundle’ are called a
‘Starter fare with Flex bundle’, a ‘Starter fare with Max
bundle’ or a ‘Starter fare with Plus bundle’.
Jetstar admitted that from 10 April 2017 until 13 March
2018, a ‘No Refunds Fare Rule’ was applied to passengers
with a basic ‘Starter fare’ and ‘Starter fare with Plus
bundle’. That is, passengers were not entitled to fare
refunds if their flights were delayed or cancelled.
But did the No Refunds Fare Rule contravene the
Australian Consumer Law?
Breaches of the Australian
The Australian Competition and Consumer Commission (ACCC)
took the view that Jetstar had made false or misleading
representations concerning its No Refunds Fare Rule: that
Jetstar had misled passengers by asserting they had no
rights to refunds and resupply in the event of significant
flight delays or cancellations for ‘Starter fares’ and
‘Starter fares with Plus bundle’ booked in the ‘booking
flow’ on its website.
Jetstar made three representations:
(1) The No Refund Representations (that no refunds
were available for bookings on ‘Starter fares’) were
contrary to the Consumer Guarantees under the Australian
Consumer Law (ACL), which are that the flight services are
to be provided with ‘due care and skill’, are to be
‘reasonably fit for purpose’ (s 60 ACL) and are to be
supplied ‘within a reasonable time’ (s 62 ACL).
(2) The Exclusion of ACL Representations – the No
Refund Representations were that the ‘Consumer Guarantees
will not apply’. In fact, the Consumer Guarantees cannot be
excluded from applying (s 64 ACL). Therefore the No Refund
Representations were false or misleading as to the existence
of a guarantee (s 18 and s 29(1)(m) ACL).
(3) The Limitation of Liability Representations were
that a passenger’s rights under the ACL were limited to a
seat on another flight or paying the cost of the flight
(with another airline). In fact, a passenger’s rights also
include termination of the contract and damages for
reasonably foreseeable loss (s 64A ACL). Therefore the
Limitation of Liability Representations were false or
misleading (s 18 and s 29(1)(m) ACL).
Jetstar gave a s 87B Enforceable Undertaking to the ACCC
to review its Conditions of Carriage to remove these
representations and to make its fare refund policies
compliant with the ACL.
Because of the seriousness of the conduct, the ACCC
applied to the Federal Court of Australia to determine a
penalty, declarations and costs.
appropriate penalties for
contraventions of the Australian Consumer Law
In Australian Competition and Consumer Commission v
Jetstar Airways Pty Ltd  FCA 797 (30 May 2019)
Justice Perry considered that penalties of $1.95 million for
the contraventions were appropriate, and ordered Jetstar to
contribute $50,000 towards the ACCC’s legal costs, for these
1. It is necessary “to send a strong message of
deterrence to Jetstar and other companies from providing
false or misleading information about the availability of
the Consumer Guarantees” and “to remind other companies of
the need to carefully review their websites, including
online booking and sales flows and standard terms of trade
to ensure that they do not convey a misleading or deceptive
impression about these consumer protections”. Specific
deterrence was needed in Jetstar’s case because it had
previously been prosecuted and penalised for failing to
adequately disclose booking service fees when fares were
purchased on its website.
2. “The representations appeared on the website in the
booking flow and conditions over a lengthy period (11
months) during which a very substantial number of bookings
were made on the website” (252,000 per month for flight
services). “There is a reasonable possibility that some
consumers may have suffered loss or damage” (i.e. loss of
fares paid). In Jetstar’s favour, the Court noted that
“effective mechanisms had been put in place to audit
previous complaints and deal with new complaints”.
3. “The penalty is serious taking into account the size and
position in the market of Jetstar”. The Court noted that
“Jetstar is the third largest airline in Australia in terms
of market share. It operates up to 1806 domestic flight
services a week within Australia and up to 328 international
flight services”. In the financial year ended June 2018, the
Jetstar Group reported revenue of $3.77 billion and
underlying earnings before interest and tax of $461 million.
4. A “high degree of cooperation was demonstrated by Jetstar
from the outset with the ACCC investigation and in seeking
to resolve these proceedings as soon as they were advised of
the ACCC’s intention to commence proceedings”.
Jetstar’s new Starter Fare
Rules for fare refunds
The Starter Fare Rules have been amended. The ‘No Refund
Representations’ no longer exclude the Consumer Guarantees
in the ACL:
Refunds on fare and Jetstar add-ons -
Non-refundable, except in certain circumstances
including under the Australian Consumer Law or
Conditions of Carriage.
The Conditions of Carriage no longer contain the
Limitation of Liability Representations and now provide for
rebooking, fare credits and refunds in certain
Where we make a Significant Change to your flight due
to an Event Beyond Our Control, whether you have checked
in or not, we will:
- use reasonable endeavours to rebook you on the
next available flight on our services at no
additional cost to you
- alternatively, if we are unable to rebook you on
services acceptable to you, we will provide you with
a flight credit where the purpose of your trip is
‘Significant Change’ means a change of three hours or
more to your scheduled departure time.
‘Event Beyond Our Control’ means weather events, air
traffic control issues, industrial action by a third
party, security issues or any other unusual and
unforeseen circumstance which we cannot control and the
consequences of which we could not have avoided.
If the change is not a Significant Change but we or
our Authorised Agents cannot book you on another flight
which you are prepared to accept, and the change means
you are unable to use your Booking for its intended
purpose, we will refund the applicable fare.
The fact that the ACCC chose to take Jetstar to court to
impose a penalty was deliberate – as ACCC Chair Rod Sims
said: “Businesses simply cannot make blanket ‘no refunds’
statements, because they can mislead customers into thinking
they can never get a refund under any circumstances”.
The other major Australian Airlines, Qantas, Virgin and
Tiger, had more nuanced refunds policies, and the ACCC was
prepared to accept s 87B Enforceable Undertakings from them
to correct breaches of the ACL without pursuing penalties.
Memo to Airlines: It’s time to review
refund policies, cancellation and change fees to comply with
the Australian Consumer Law