In Europe and North America airlines must pay compensation to passengers if their flight is cancelled or delayed if it is the airline’s fault.
But not in Australia. Australian airlines pay no compensation at all. All they do is re-book the flight or refund the fare.
In this article, we compare how Australian airlines treat cancellations and delays with what European and North American airlines are required to do. We conclude with proposals for new consumer protections for airline passengers in Australia.
Key points
- Australian airlines do not compensate for flight cancellations and delays and will refund fares only if the event causing the delay or cancellation was within their control.
- European and North American (Canadian) airlines must pay compensation in addition to a fare refund or another flight booking for cancellations and for delays of more than 3 hours, if the flight cancellation or delay was not caused by an extraordinary circumstance.
- The Australian Government is reviewing consumer protection for air passengers and is expected to issue its policy recommendations in 2024.
- Consumer Advocates in Australia want a European / North American style compensation scheme for flight cancellations and delays. The Australian Government is equivocal.
Australian Airlines: policies for flight cancellations and delays
Overview
Passengers on domestic flights cancelled or delayed by Australian airlines are entitled to either a fare refund or a re-booking on another flight acceptable to the passenger.
No compensation is paid, except when there are long delays, when meals, airport transfers and accommodation for overnight delays away from home are reimbursed.
For there to be a fare refund or a flight re-booking, the cancellation or delay must be within the control of the airline.
Qantas, Jetstar and Virgin provide these examples:
Events within the control of the airline: engineering and aircraft maintenance issues, IT system outages, delayed delivery of baggage to the carousel due to resourcing issues, late cleaning/loading of catering to the aircraft, crew/staffing issues, overbooking, stopped operating services on a route for commercial reasons, and missed connecting flights on the same airline.
Events outside the control of the airline: Dangerous weather conditions, natural disasters, technical problems, air traffic control issues, industrial action by a third party, medical emergencies on board, security issues.
Specific airline policies are:
Qantas
If Qantas cancels or delays a flight within 72 hours of the scheduled departure time, Qantas gives the passenger the choice to either re-book on the next available Qantas flight which is acceptable to the passenger or to a refund the fare.
Qantas advises that refunds are available in these circumstances:
- If we delay your flight to the extent that you have to cancel your travel.
- If we make a significant change to the scheduled flight time and we are unable to book you on an alternative flight that is acceptable to you.
- If we cause you to miss a connecting Qantas flight on which you have a confirmed reservation.
- If we are unable to carry you and you have a confirmed reservation (overbooking).
Jetstar
If Jetstar cancels or delays a flight within 72 hours of the scheduled departure time and the delay results in a change of three or more hours to the scheduled departure time, Jetstar will give the passenger the choice to either receive a refund the fare or to be re-booked on the next available (and acceptable to the passenger) Jetstar flight, without charge.
Virgin
If Virgin delays a domestic flight for more than two hours or cancels a flight, Virgin will move the passenger to the next available Virgin Australia service to the same destination without charge. If the new flight time is not suitable, the passenger may be transferred to a flight operated by another carrier that is suitable. Alternatively, the passenger may request a flight credit or a full refund of the fare paid.
Airlines in Europe: Compensation for cancellations and delays
European Law (EU Regulation 261/2004) provides financial compensation if these flights are delayed or cancelled:
- If your flight is within the EU and is operated either by an EU or a non-EU airline
- If your flight departs from the EU to a non-EU country and is operated either by an EU or a non-EU airline
- If your flight arrives in the EU from outside the EU and is operated by an EU airline
A flight is cancelled if the airline fails to notify the passenger it is cancelled at least 14 days prior to the due departure date, and is treated as cancelled when:
- the original flight schedule is abandoned, and the passenger was transferred to another scheduled flight;
- the aircraft took off but, was forced to return to the airport of departure and the passenger was transferred to another flight;
- the aircraft arrived at an airport which was not ticketed as the final destination, and the re-routing was not agreed by the passenger.
A flight is delayed when:
- the passenger arrives at the final destination with a delay of more than 3 hours, unless the delay was due to extraordinary circumstances.
- the flight arrives at an airport which is not ticketed as the final destination as a result of an agreed re-routing or is a diversion to another airport that serves the same town, city or region.
The financial compensation payable for delayed or cancelled flights is:
- EUR 250 for flight distances of 1,500 km or less
- EUR 400 for flight distances of more than 1,500 km within the EU, and other flights between 1,500 km and 3,500 km
- EUR 600 for flight distances of more than 3,500 km
No compensation is payable if the flight was cancelled or delayed because of an extraordinary circumstance:
Examples of events considered by the EU as an extraordinary circumstance are:
- air traffic management decisions
- political instability
- adverse weather conditions
- security risks.
Examples of events not considered to be an extraordinary circumstance are:
- most technical problems which come to light during aircraft maintenance or are caused by failure to maintain an aircraft
- collision of mobile boarding stairs with an aircraft
- strikes by air carrier staff (internal strike action)
Some events such as a labour strike external to an air carrier that affects the operation of the airline may be considered as an extraordinary circumstance if: (i) there is a link between the extraordinary circumstance and the delay or the cancellation; and (ii) the delay or cancellation could not have been avoided even if all reasonable measures had been taken.
There are some circumstances where no compensation is payable:
- No EU compensation is payable if you have already received benefits (compensation, re-routing or other assistance from the airline) for flight related problems for this journey under the relevant law of a non-EU country.
- No EU compensation is payable for delays, cancellations or overbooking for flights from the UK to the EU by a UK airline. But compensation is payable for flights from the EU to the or elsewhere by a UK airline.
In addition, airline must provide assistance for delays:
If the flight is delayed for two hours or more at departure, the airline must offer the passenger care (meals and refreshments and, if necessary, accommodation).
For more see the Your Europe Air Passenger Rights webpage.
Airlines in North America: Compensation for cancellations and delays
USA
The United States Department of Transportation (DOT) is responsible for consumer protection. Until recently, the only consumer protection the DOT provided was to fine airlines for “Tarmac Delays”.
Tarmac Delays are situations when passengers on board an aircraft and are either awaiting take off or are on an aircraft which has just landed. The delay must be for 3 hours or more. Common causes are bad weather (thunderstorms, icy surfaces, snow), high traffic, mechanical issues, security threats and delayed crew members.
The DOT has a new policy. This is from Aviation Consumer Protection Service Dashboard:
“The DOT has initiated a new rulemaking to make passenger compensation and amenities mandatory when airlines cause flight disruptions. After a two-year DOT push to improve the passenger experience, the 10 largest airlines now guarantee meals and free rebooking on the same airline and nine guarantee hotel accommodations.
The DOT’s Airline Customer Service Dashboard highlights which airlines currently offer cash compensation, provide travel credits or vouchers, or award frequent flyer miles when they cause flight delays or cancellations.”
Canada
The Canadian Transportation Agency (CTA) has developed the Air Passenger Protection Regulations (SOR/2019-150) to set minimum airline obligations toward passengers.
This is from the CTA Webpage:
“Airlines must provide compensation for the inconvenience of flight cancellations and flight delays of 3 hours or more and if the disruption is within their control and not related to safety, and if the airline notified you of the disruption 14 days or less in advance.
Airlines must pay you compensation based on the length of your delay, which is determined by your arrival time at the final destination on your ticket.
Large airlines must pay:
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- $400 if the passenger arrives three or more hours late, but less than six hours
- $700 if the passenger arrives six or more hours late, but less than nine hours
- $1,000 if the passenger arrives nine or more hours late
If you choose to be refunded instead of rebooked, large airlines must still pay you $400.
The size of the airline is listed in the terms and conditions of your ticket (tariff). Air Canada (including Jazz) and WestJet are currently large airlines.
Small airlines must pay:
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- $125 if the passenger arrives three or more hours late, but less than six hours
- $250 if the passenger arrives six or more hours late, but less than nine hours
- $500 if the passenger arrives nine or more hours late
If you choose to be refunded instead of rebooked, small airlines must still pay you $125.
The size of the airline is listed in the terms and conditions of your ticket (tariff). Sunwing Airlines, Air Transat, Porter Swoop and Flair Airlines are currently small airlines.
All compensation amounts are in Canadian dollars.
You have one year to make a compensation claim with the airline in writing. The airline has 30 days to respond by issuing a payment or telling you why it believes compensation is not owed.
If you have already received compensation for the same event under the passenger protection rules of another country, you cannot receive further compensation under these Canadian regulations.
Airlines must offer you compensation in monetary form — for example cash, cheque, or a deposit into your bank account. Airlines can also offer you other forms of compensation such as vouchers or rebates. Other forms of compensation offered must:
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- have a higher value than the monetary compensation required, and
- cannot expire.
The airline must tell you in writing the amount of compensation you are owed and the value of any other form of compensation that they offer. You always have the right to choose between monetary compensation and other form(s) offered by the airline. If you choose another form, you must confirm in writing that you know that monetary compensation is available.”
The Australian Competition and Consumer Commission (ACCC)
The ACCC is responsible for consumer protection for air passengers in Australia. The ACCC is strongly advocating strengthening consumer guarantees to address customer service issues and consumer remedies for flight cancellations and delays.
In the ACCC submission in response to the terms of reference for the Aviation White Paper of 15 March 2023, the ACCC said:
“At present, there are little to no incentives in the Australian Consumer Law (ACL) for businesses to comply with their consumer guarantee obligations. This significantly undermines the consumer guarantees regime [in the ACL]. The ACCC’s recommended reform would change business incentives and improve compliance with the ACL.
Where there is non-compliance with the consumer guarantees, it is also difficult for individual consumers to enforce their rights. The costs of taking action in a court or tribunal can be considerable, particularly when consumers are opposing a well-resourced airline. Further, there is limited effectiveness to such court or tribunal actions as consumers may not be granted the full remedy they are entitled to. In many tribunal considerations, the focus can be on determining some resolution to the dispute involving compromise, usually by consumers, rather than necessarily following the parties’ entitlements and obligations under the law.
There needs to be the right frameworks in place to:
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- better incentivise the airlines investing in customer service improvements across all aspects of their operations, and
- provide an effective external dispute resolution system.”
The ACCC is not in favour of a European Union / Canadian style compensation scheme, as is evident from this statement in the submission where it raises a number of barriers:
“Some advocates have called for consumer protection measures to be introduced in Australia that set out more specific consumer compensation entitlements for delayed or cancelled flights.
Introducing more specific requirements like this in Australia could be considered further as the Government develops its aviation related policies through the White Paper process. Further consultation would be required to assess all potential impacts on the market and consumers and balance the perspectives of both consumers and industry in considering potential reforms. Further consideration would also need to be given to the merits of sector specific rules around the remedies for the cancellation of services, as compared with the merits of the whole of economy requirements provided by the ACL consumer guarantees.”
In the Media Release Domestic airline competition at a crucial juncture (5 June 2023), the ACCC said:
“The [Airline Competition in Australia final] report also states that sustained declining levels of customer service in the airline sector warrant the Government considering new regulatory incentives for airlines to invest in their customer service.”
“There is a clear need for a truly independent and external dispute resolution ombuds scheme, which has the power to make binding decisions,” ACCC Chair Ms Cass-Gottlieb said.
“The ACCC has also strongly advocated for reform to the consumer guarantees under the Australian Consumer Law, to make it illegal for businesses to fail to provide a remedy for consumer guarantees failures.”
“Reform to the consumer guarantees to make them enforceable would dramatically improve incentives for all businesses, including airlines, to comply with their obligations and more effectively protect consumer rights,” Ms Cass-Gottlieb said.
In ACCC Media Release ACCC takes court action alleging Qantas advertised flights it had already cancelled (on 31 August 2023) the ACCC explained that the court action was restricted to Qantas’s post cancellation conduct, without explaining why it did not pursue Qantas for the cancellations:
“We allege that Qantas made many of these cancellations for reasons that were within its control, such as network optimisation including in response to shifts in consumer demand, route withdrawals or retention of take-off and landing slots at certain airports,” ACCC Chair Ms Cass-Gottlieb said.
“However, this case does not involve any alleged breach in relation to the actual cancellation of flights, but rather relates to Qantas’ conduct after it had cancelled the flights.”
New consumer protection for air passengers in Australia?
The Australian Government issued a policy paper on the aviation sector: Aviation Green Paper (towards 2050) on 7 September 2023, which identifies these key consumer protection issues:
- Strong competition in an industry can be expected to produce better outcomes for consumers.
- Consumer complaints in Australia suggest competition is not delivering the outcomes consumers expect.
- Key customer complaints include flight cancellations, delays and the terms and conditions for refunds and flight credits when these occur.
- An appropriate consumer framework needs to reflect the operational realities of air travel while providing adequate minimum baseline protections for travellers.
- This framework needs to consider different international ticketing arrangements, for example the practice overseas of ‘bumping’ passengers by overselling tickets on particular flights and then asking passengers to give up their seats, a practice not widely followed by Australian airlines.
These points are made in the Aviation Green Paper:
- Australia has no aviation-specific consumer protection laws.
- The terms and conditions of carriage which apply to an airline must comply with the Australian Consumer Law (ACL). The ACL contains Consumer Guarantees that services will be rendered with due care and skill and that services will be suppled within a reasonable time. There must no unfair contract terms.
- The ACCC, with State Fair Trading Offices, are responsible for administering the ACL.
- The ACCC does not generally resolve individual consumer complaints about delayed or cancelled flights. It focusses its compliance activities on issues that can result in widespread harm.
- The Australian Consumer Advocate (ACA) is an industry body funded by the four major domestic airlines and operates as a clearing house for consumer complaints. It passes on its recommendations for complaint resolution to the airline to implement.
- The Australian Department of Transport which is responsible for the Civil Aviation Safety Authority (CASA) regulates Australian aviation safety. It does not have a role in consumer protection.
- There is an acknowledgement that the challenges of increasing capacity in 2021 contributed to a sharp rise in consumer complaints about “and gives further weight to longstanding advocacy by Australian consumer groups for aviation specific rules similar to European arrangements. There are also calls for establishing an independent ombudsman to improve processes for handling consumer complaints or a Customer Rights Charter that includes minimum requirements for consumer protection and customer service.”
The Aviation White Paper is expected to issue in 2024.
Watch this space!