If Australia had this, passengers could be paid for cancelled flights

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Why Australia needs an aviation ombudsman.

The financial difficulties of Rex Airlines, coming so soon after the bankruptcy of Bonza, have brought into sharp focus one of the federal government’s key priorities for aviation: enhancing passenger rights.

In each case, passengers were left with tickets for flights that did not fly. In the case of Rex, tickets were honoured by rivals Virgin Australia and Qantas, possibly trying to recapture the small toehold Rex had established in the Brisbane-Sydney-Melbourne golden triangle.

The Bonza story was more complex as the fledgling airline, which collapsed in May, had sought to exploit under-serviced routes to smaller leisure-based cities including Maroochydore and Port Macquarie.

In many cases, passengers were left out-of-pocket and stranded.

People boarding a Rex Airlines flight

Passenger rights have been brought into sharp focus after the recent financial difficulties of Rex Airlines and Bonza.

Support for an ombudsman

These failures will have emboldened the federal government’s plans to introduce stronger passenger protections and an airline ombudsman.

The release of its policy white paper is imminent. The paper covers aviation issues including competition between airports and airlines, the sector’s environmental impact and better mechanisms for consultation.

After years of opposition, Qantas and Virgin quietly fell in behind the idea in May, signalling a deal is close to being announced.

The ombudsman is designed to protect consumer rights in what is often monopolistic or quasi-monopolistic operating environments. With the exception of residents of southeast Queensland and the western suburbs of Melbourne, most Australians only have one airport from which to fly.

This, coupled with an effective airline duopoly, can lead to higher prices and poorer service for consumers, the Australian Consumer and Competition Commission (ACCC) has argued.

People boarding Bonza flight
Bonza suspended all flights and entered voluntary administration on 30 April.

The ACCC has been calling for better passenger rights for more than a decade. But its calls grew louder after it fined Qantas A$120 million for selling “ghost" flights in May.

Passengers did receive refunds, but the process was not easy compared to many overseas jurisdictions where compensation is automatic and based on distance travelled.

Australia is rare among developed countries for not having automatic compensation if a flight is cancelled or delayed.

The EU model

The leader in air passenger rights, as in many areas of consumer protection, is the European Union. The EU Passenger Rights regulation is 20 years old and now also applies to rail and bus passengers.

The regulation favours the passenger and awards compensation of up to €600 (almost A$1,000) for delays or cancellations. There are clauses for when a delay is unavoidable, but generally airlines have now built the scheme into their costs of doing business.

The scheme is well publicised and in 2022, about eight million passengers were eligible for refunds.

Air passenger rights in the UK continued in the EU mould after Brexit and were even strengthened.

But in a 2023 review into the UK scheme, some airlines argued “private insurance was a better option for some passengers", particularly those with disabilities.

The same reasoning led to the removal of Australia’s previous consumer protection scheme for airline passengers, the Travel Compensation Fund, which refunded customers when airlines or travel agencies went bankrupt.

Rex flight on ground
Australia’s Travel Compensation Scheme was abolished in 2014. (Image: Josh Withers)

The scheme was ended under the Abbott government in June 2014, with travellers told instead to take out their own travel insurance.

Labor is expected to reintroduce an element of corporate responsibility for airline delays, not least since Brazil, Canada and Türkiye have also followed the EU’s lead.

Brazil’s scheme is particularly generous, with up to R7,500 (A$1,950) available to passengers who have to pay for last minute accommodation if their flight is cancelled.

Lawmakers there countered claims by airlines that low cost airline passengers could stay in cheaper hotels, by applying the compensation uniformly, regardless of travel class.

Air passenger rights can be a vote winner, too. Before he withdrew his bid for reelection, US President Joe Biden trumpeted the automatic airline compensation scheme the US Department for Transportation will bring in this year.

Until now, airline compensation was mandated by the states without coordinated processes meaning some airlines used vouchers, some credits and a few cash to compensate customers.

Despite this, about US$3 billion (A$4.6 billion) in refunds have been issued to US passengers since 2020, including more than US$600 million to Southwest Airlines passengers alone.

This was due to a serious scheduling crisis which forced the low-cost carrier to cancel almost 60% of its flights in the 2022 summer.

By contrast, in Australia, air passengers have only had basic protections under consumer rights law since deregulation in 2002.

There is no guarantee of a seat or even flight the consumer purchased. This has led consumer advocates including Choice to support calls for an airline ombudsman and automatic delay and cancellation compensation.The Conversation

Rex flight in air
Australia offers weak consumer protection in a market with little competition. (Image: David Syphers)

Justin Wastnage, Adjunct Industry Fellow, Griffith Institute for Tourism, Griffith University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.
Justin Wastnage
Justin Wastnage is the principal at aviation and tourism policy consultancy Message Shapers. In this position he has led research projects into cruise ship access options for Sydney Harbour, air transport access to New Caledonia and work around privatisation of council-owned airports in New South Wales.
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The Gold Rush town that’s become Victoria’s best country escape for foodies

    Jocelyn Pride Jocelyn Pride
    The well-preserved Gold Rush town where an idyllic country vibe meets the best of city living.

    Cafe culture

    ‘Slow down’ is the mantra of Tortoise Espresso, and it’s apt for anyone visiting town. This local coffee hangout was the brainchild of Lloyd Meadows, who at 16 started it as a hole in the wall of an old pub. Five years on, it graces a fine shopfront with a menu of around 60 different coffees. Other one-off centrally located daytime cafes, such as Saffs, Togs, Saint Florian and Lazy Bones, are tucked into historic buildings and serve creative menus featuring local produce. A personal favourite is Origini, where chef Luca Sartori brings a taste of northern Italy to his rustic restaurant. For the best banh mi outside Vietnam head to Super Hero, and the pastries at Johnny Baker are legendary.

    the Saint Florian Cafe, Castlemaine
    Saint Florian is one of many businesses tucked away in a historic building. (Image: Griffin Simm)

    On the town’s fringe you’ll find some treasured cafes: Blackbird. Grist, Doveton Corner Store, and the cosy Aitken’s Corner. The Mill precinct also brings another dimension to Castlemaine. Located directly opposite the beautiful Botanical Gardens, this once-derelict woollen mill is a hive of creativity and collaboration. Retaining an industrial feel, it is home to a myriad of 44 unique businesses, galleries and studios that stretch over the three-hectare site.

    Brilliant brews, bars and food

    diners at The Mill, Castlemaine
    The Mill is home to many local businesses. (Image: Visit Victoria/Michelle Jarni)

    The Mill is also home to one of Castlemaine’s bespoke breweries, Shedshaker Brewing Company and Taproom. Within the sensitively restored walls of the oldest part of the building (circa 1875), small-batch, handcrafted beer features alongside fine wholesome food and live music.

    A more recent newcomer to the brewing scene is Love Shack. Starting small as a laneway pop-up in 2021, visionaries Conna Mallett and Harry Cox were armed with a Melbourne beer culture pedigree, which helped them create a great new ‘pub’ that feels as though it’s been there since the 1850s. Other atmospheric bars and restaurants are dotted around town – Grafting Cellars for local wines by the pour; buzzy Mostyn Street Cellars; Table Records plays vinyl on weekends; and the quirky Maurocco bar is not to be missed.

    food and drinks at Love Shack Public Bar & Bistro, Castlemaine
    The nostalgic Love Shack Public Bar & Bistro serves comfort food. (Image: Visit Victoria)

    For food you’ll write home about, the hatted Bar Midland serves exquisite dishes from Victorian-only produce. The freshly renovated Wild is located in the original firestation, Voor Ouker specialises in Indonesian/Dutch fusion, and the Railway Hotel oozes English pub charm.

    the Theatre Royal, Castlemaine
    Theatre Royal is the longest continually operating theatre on the mainland. (Image: Chloe Smith Photography)

    Much-loved Teatro Regio, found in the magnificent Theatre Royal, is the go-to for pizzas with a twist. As mainland Australia’s longest continually running theatre, this grand dame is also one of more than a dozen performance spaces that add to a rich and diverse entertainment and festival scene.

    pizza at Theatre Royal
    Dine before a show at Theatre Royal. (Image: Tourism Australia/Visit Victoria)

    Quirky country stays

    Quirky, authentic and perfectly located, the Midland Hotel is a private hotel that dates back to 1879. Each of the nine rooms at the Northern Arts Hotel is different and named in honour of an Australian artist. Castlemaine Boutique Accommodation also has a range of properties to suit all types of travellers.