Australia to get airline ombudsman, passenger rights charter

Passengers whose flights are cancelled or significantly delayed will receive cash refunds under a new customer rights charter, while an independent airline ombudsman will be given new powers to handle complaints and force airlines to take appropriate action.

These are the key measures in a national Aviation White Paper released today by the Federal Government.

“Too many Australians have been left out to dry when flights are cancelled or disrupted and it’s impossibly complex to get a refund or even contact a company representative,” said Transport Minister Catherine King. 

“Customers deserve to get their money back if they are owed it. Full stop. It’s time to take strong action to protect consumer rights with an Aviation Industry Ombuds (ombudsman) Scheme and charter of customer rights.”

However, the proposed passenger rights charterstops short of passenger compensation schemes in the UK and Europe, where passengers are entitled to compensation payments between $400 and $1000 for delayed or cancelled flights, based on the distance of their trip and length off the delay, while also allowing for how much notice an airline gives passengers.

This was the same model being pursued by the Airline Passenger Protections (Pay on Delay) Bill introduced to the Australian Senate earlier this year by the Liberal and National Party opposition.

While the office of the indep­endent ombudsman wouldn’t be formally set up until 2026, an ‘interim ombudsman’ will be appointed as early as next week to begin drawing up the passenger rights charter, and will be able to receive complaints from next year.

Considered a blueprint for sweeping reform of the Australian aviation industry, the white paper also seeks to allocate more flights for overseas airlines through bilateral air service agreements and negotiate for ‘open skies’-style agreements, and to “reform Sydney Airport slot management arrangements” for the allocation of take-off and landing slots at Sydney Airport and “reduce incentives for anti-competitive slot misuse.”

Both measures are being adopted with the aim of unlocking greater competition in Australia’s skies, including “rebalancing slot allocation towards new entrants.”

The Aviation White Paper’s passenger rights charter and more broadly the ombudsman are the Labor Government’s response to the Airline Passenger Protections (Pay on Delay) Bill introduced to the Australian Senate by the Liberal and National Patry opposition.

Australia’s new ‘bill of rights’ for passengers

While the Customer Rights Charter will cover domestic airlines such as Qantas and Virgin Australia, it could also be extended to international carriers.

To be developed by the indep­endent ombudsman in consultation with the industry and consumer groups, with submissions open until October, this ‘bill of rights’ for passengers will:

• codify customers’ entitlements to refunds, across all fare types, for flights that are disrupted, cancelled or unreasonably delayed
• define the length of flight delays that are considered unreasonable
• qualify reasons for disruptions, delays and cancellations that are considered within the airline’s control (separate to factors such as the impact of weather)
• require airline make timely communication with passengers in providing services in line with customer rights
• outline other airline obligations when flights are disrupted, cancelled or delayed, such as providing support to make alternative travel arrangements

“The charter will outline minimum customer service levels, give customers greater certainty about what they can expect when flights are cancelled and delayed and when passenger journeys are disrupted, including in relation to the prompt payment of refunds,” the paper says.

Airlines would be required to issue cash refunds rather than vouchers for credit against future bookings, regardless of the type of fare they have booked – meaning that even the most basic economy ticket would enjoy the same level of protection as more expensive ‘fully flexible’ tickets.

In addition to those refunds, which airlines would be expected to ‘fast track’ and pay within a set time, airlines would have to rebook passengers of cancelled flights.

Airlines currently face no legal requirement to compensate passengers for delayed or cancelled flights; instead, each carrier has its own compensation guidelines covering the likes of meal vouchers and overnight accommodation if required.

Independent airline ombudsman

An independent ombudsman will replace today’s airline-funded Customer Advocate, which is seen as a largely ineffective body, with fewer than 40% of complaints lodged in 2023 being resolved.

Similar to bodies already in place for the telecommunications and financial industries, the airline ombudsman will be charged with enforcing the charter of customer rights and handling complaints, which skyrocketed over recent years in the wake of the pandemic. 

After hearing those complaints, the ombudsman would have the legal power to direct airlines and airports to provide remedies to passengers, while also being able to refer instances of ‘misconduct’ for investigation and enforcement.

Airlines would also have strict reporting requirements on the cause of delays and cancellations.

The creation of an airline ombudsman has been widely supported, with Australian consumer group Choice previously suggesting such a body should be funded by the industry, with a board made of up equal numbers of consumer and industry representatives and an independent chair.

What the airlines say

While Qantas and Virgin Australia have lately warmed to the idea of an independent ombudsman, they have previously railed against compulsory compensation laws such as those of the UK and Europe, where passengers are entitled to between $400 and $1000 for delayed or cancelled flights.

Those payouts are based primarily on the distance of their trip and length off the delay, but also allowing for how much notice an airline gives passengers; compensation is also required if a delay means a passenger misses a connecting flight on the same reservation.

Industry body Airlines for Australia and New Zealand (A4ANZ) – which counts Qantas, Virgin Australia, Regional Express, Jetstar and Air New Zealand among its members – had also warned against considering “airline compensation schemes as a silver bullet for Australian consumers,” saying  compensation schemes “don’t work to reduce delays” and that airlines “are already commercially and financially incentivised to minimise disruptions.”

A4ANZ today steered into welcoming the inevitable, saying the Aviation White Paper struck a good balance of ensuring that temporary challenges were not driving long-term policy decisions, and addressed key issues faced by the sector.

“With airfares and on-time performance returning to pre-pandemic levels, the Government’s announcement of an aviation ombuds scheme and a passenger rights charter represents a sensible and measured approach,” said A4ANZ Chairman, Professor Graeme Samuel.

“We welcome the opportunity to contribute to these policies, ensuring that they are built on principles of shared accountability for all parts of the aviation ecosystem.”

Click here to download the Aviation White Paper in PDF format.