My flight, tour or cruise has been cancelled because of COVID-19 travel restrictions. Am I entitled to a refund?

Must travellers accept a credit note or voucher instead of a refund, if travel is cancelled due to travel restrictions imposed under the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 (NSW) and its equivalents throughout Australia?

The answer lies in the Australian Consumer Law.

The Consumer Guarantees under the Australian Consumer Law (ACL)

The starting point is that travel supplier (the airline, cruise line, tour operator) must comply with the three Consumer Guarantees under the ACL, that the travel services:

1. will be rendered to a consumer with due care and skill (s 60, ACL);
    
2. will be reasonably fit for any particular purpose made known, expressly or by implication, to a supplier for which the services are being acquired by the consumer (s 61(1), ACL); and
    
3. will be supplied within a reasonable time (s 62, ACL).

Consumer Guarantee (3) applies if travel services cannot be supplied as booked because of restrictions on movement, closure of borders, and so forth. The guarantee is that if travel cannot be supplied as booked, it must be supplied within a reasonable time.

The consumer’s rights to a refund will depend on whose fault it is that the travel cannot be supplied as booked or be re-scheduled within a reasonable time:

1. If it is the supplier’s fault, and the travel can be re-scheduled within a reasonable time, then only if the travel is not re-scheduled within a reasonable time can the consumer cancel and obtain a refund (s 267(2) ACL); or
    
2. If it is the supplier’s fault, and the travel cannot be re-scheduled within a reasonable time, then the consumer can cancel and obtain a refund (s 267(3) ACL); or
    
3. If it is not the supplier’s fault, but is ‘an act … made by any person other than the supplier’ or ‘a cause independent of human control’ then the consumer must accept their rights to cancel and receive a refund are according to the terms and conditions which apply to the travel (s 267(1)(c) ACL).

An example of the first alternative is where the supplier re-schedules to suit the consumer or provides a credit note or voucher to the consumer to allow them to re-book the travel at their convenience within a specified time frame. Airlines issue flight credits, cruise lines issue cruise credits, in these circumstances.

An example of the second alternative is found in the decision of Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2019] FCA 797. In that case, Justice Perry ruled that Jetstar’s fare rules which provided that the Starter Fare and Plus Fares were “non-refundable” were misleading because Jetstar was required under the Consumer Guarantee to refund the fare if a flight was cancelled because of a major failure or if a flight was delayed and was not able to be re-scheduled within a reasonable time.

An example of the third alternative is found when a tour itinerary needs to be changed because of an event outside of the supplier’s control. This is an example of a force majeure clause from the terms and conditions of Scenic Tours, extracted from the NSW Court of Appeal decision of Scenic Tours Pty Ltd v Moore (no 2) [2018] NSWCA 300:

Although We will use reasonable efforts to operate the Tour as close as possible to Your Itinerary, changes or substitutions may be necessary for reasons outside Our control. These circumstances may include, but are not limited to:

(1) road, river or weather conditions;
(2) national or local holidays affecting the closure of public buildings and attractions;
(3) strikes; or
(4) civil disturbances and advices by governments or other Force Majeure Events.

Cruise itineraries may be varied due to high or low water levels, flooding, lock closures, unscheduled vessel maintenance or for any other circumstances beyond Our control.

Note the words ‘outside/beyond Our control’ – the travel disruption is not the fault of the travel supplier. In Scenic Tours, the river cruise itinerary was changed because high water levels caused by heavy rain made many bridges impassable (a force majeure event). The tour was not re-scheduled. The Court found that Scenic Tours was at fault because the tour provided with the changed itinerary was sub-standard – it lacked due care and skill.

There are currently no examples where government travel restrictions such as closure of borders have forced travel suppliers to re-schedule travel.

The ACCC COVID-19 (coronavirus) information for consumers

The Australian Competition and Consumer Commission (ACC) which regulates the Australian Consumer Law has issued a general advice to consumers on their rights when Travel cancellations and changes occur by posing and answering this question:

My flight, tour or cruise has been cancelled. Am I entitled to a refund?

• If your travel is cancelled the ACCC expects that you will receive a refund or other remedy, such as a credit note or voucher, in most circumstances.
   
• If your travel is cancelled due to government restrictions, this impacts your rights under the consumer guarantees. However, you may also have other remedies outside of the Australian Consumer Law.
   
• For example, you may still be entitled to a refund under the terms and conditions of your ticket.
   
• If you had a right to a refund under these terms and conditions at the time you purchased your ticket, businesses are not permitted to change the terms at a later time to deny you a refund.
   
• Depending on your circumstances, you may also have other rights under common law, contract or state legislation.
   
• You should contact the business directly to request a refund or other remedy such as a credit note or voucher.
   
• If you receive a credit note or voucher, it should have an expiration date which is long enough to allow you to use the credit note or voucher.
   
• State and territory consumer protection agencies may be able to assist with guidance or conciliation involving relevant state legislation. Consumers may also wish to seek independent legal advice about whether they may have a remedy under common law, contract or state legislation.

Key points for travel suppliers and consumers

The ACCC advice can be summarised as follows:

1. The advice ‘If your travel is cancelled due to government restrictions, this impacts your rights under the consumer guarantees’ is a clear reference to an event outside of the control of the travel supplier, as contemplated by s 267(1)(c) of the ACL, which means that the consumer cannot treat a cancellation because of COVID-19 travel restrictions as a cancellation by the supplier.
    
2. Therefore for cancellations of bookings due to border closures, the ACCC will allow travel suppliers to issue credit note or voucher as an alternative to a refund, provided that the expiration date is far enough in the future for it to be used.
    
3. If the consumer insists upon a refund is issued, the travel supplier is entitled to charge a fee and/or retain the deposit in accordance with their terms and conditions.

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