At last, a new regime for refunds for flight delays and cancellations in Australia

Until now, Australian airlines have provided refreshments, meals and overnight accommodation to passengers whose flights were delayed or cancelled. As a rule, fare refunds were not available for: sale, low cost and non-flexible economy fares, although credits were available for re-booking.

During the past year, the Australian Competition & Consumer Commission (ACCC) has been engaging with the airline industry in Australia to address its concerns that their ‘no refund’ statements on their websites were misleading consumers about their rights to refunds and resupply of flights.

On 17 December 2018, the ACCC announced that “Jetstar, Tigerair, Qantas and Virgin Australia have committed to ensuring their refund policies and practices comply with their consumer guarantee obligations under the Australian Consumer Law.”

What conduct concerned the ACCC for flight delays and cancellations?

Each of the four airlines has agreed to address specific conduct of concern raised by the ACCC, as follows:

Jetstar will review consumer complaints made between 10 April 2017 to 13 March 2018 that its ‘Economy Starter’ fares and ‘Plus Bundle’ fares were not refundable, that customers were only entitled to refunds on fares if they purchased a flight bundle at additional cost, that statutory guarantees and warranties did not apply to flight delay or cancellation and that Jetstar’s liability was limited to supplying the services again. It will offer refunds or other remedies to consumers that were entitled to these remedies.

Tigerair will address the ACCC’s concerns that refunds would only be provided if consumers paid a “refund admin fee” and that consumers could only receive a refund in the form of a credit that was only valid for six months. It will offer refunds or other remedies to consumers that were entitled to these remedies.

Qantas will review consumer complaints made between 18 April 2017 to 12 March 2018 that refunds were not available in relation to its ‘Red e-deal’ fare type for Flight Services, and statutory guarantees and warranties did not apply to a flight delay or cancellation. It will offer refunds to consumers that should have been entitled to one.

Virgin Australia will review certain consumer complaints made between 1 January 2017 to 31 March 2018 that refunds were not available at any time for its ‘Domestic Getaway’ and International Short-Haul fare types, and that consumers could only receive a refund in the form of a credit valid only for 12 months for a flight delay or cancellation. It will offer refunds to consumers that should have been entitled to one.

The new regime: Enforceable Undertakings

Each of the four airlines has entered into an enforceable undertaking with the ACCC under section 87B of the Competition and Consumer Act 2010 (Cth), to apply for the next three years, to:

• conduct a comprehensive review of their policies, compliance program, website and booking systems to ensure they are compliant with the Australian Consumer Law;
  
• update its internal policy outlining their commitment to compliance with the Australian Consumer Law;
  
• notify relevant employees of their obligations to consumers under the Australian Consumer Law and their Compliance Policy;
  
• create an Australian Consumer Law webpage on the their website;
  
• include a hyperlink to their Australian Consumer Law webpage in communications sent to customers in the event of cancellations and/or flight delays;
  
• cause a comprehensive review to be undertaken of staff training;
  
• conduct a past complaint review;
  
• publish a statement on its website in relation to this Undertaking;
  
• implement a complaint review process to ensure future compliance with the Undertaking;
  
• conduct a risk review to ensure effective compliance with the Undertaking.

Background

The background to the undertakings is that on 20 December 2017, the ACCC published its Airlines: Terms and Conditions Report in which the ACCC noted that between 1 January 2016 and 14 December 2017, it had received over 1,400 complaints about airlines, largely in relation to ‘no refund’ statements, excessive fees for cancelling or changing flights and issues relating to consumer guarantees.

Further Action against Jetstar

In addition to the Undertaking given by Jetstar, the ACCC has singled out Jetstar and has instituted proceedings in the Federal Court for a civil penalty of $1.95 million and legal costs, to reflect the seriousness of its conduct.

The new ACCC guidance for flight delays and compensation

The ACCC has published this guidance:

All your usual consumer rights apply when you purchase domestic flights and international flights departing Australia. Those rights also apply to international flights to Australia where they are booked through the Australian website of an airline.

Services such as flights come with automatic guarantees, including that services must be supplied within a reasonable time.

If something goes wrong, and your flight is delayed or cancelled, you may be entitled to a refund or replacement depending on the circumstances, including:

• the length of the delay
  
• the reason for the delay or cancellation
  
• whether the airline was able to place you on another flight within a reasonable time.
  
  Note: what constitutes a reasonable time will depend on the circumstances and may not be the same each time you travel.
  
  If the airline refuses to fix the problem or takes too long, you may be able to have the service provided by another airline and recover the costs of the replacement flight

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