Australia’s aviation sector is too small for a European-style consumer aviation compensation scheme that penalises airlines for faults within their control, says the federal minister overseeing the project, but she is confident the framework coming into action next year will protect consumers.
Transport Minister Catherine King said the Consumer Aviation Ombuds would be effective despite it not being able to force airlines to compensate passengers affected by cancellations and disruptions.
Glenn Hunt/The Age .
Speaking on the sidelines of the Australian Airports Association National Conference in the Gold Coast on Tuesday, King said the scheme would be established outside the Department of Infrastructure.
“We’ve looked at the Australian jurisdiction and how the Australian market works, and we’ve modelled [the Aviation Consumer Ombuds] … on the Telecommunications Industry Ombuds scheme – that’s what [it has] looked like in terms of the consumer relationship.
“Obviously, my department has looked at Europe, looked at America, looked at Canada, as well, but that’s why we’ve established a unique Australian scheme.”
The Telecommunications Industry Ombudsman is funded by industry members.
King’s office has received submissions on the proposed regulation, and will share details of decisions in coming weeks. There are plans to legislate the changes next year.
The minimum standards for consumers will be set out in an aviation consumer protections charter, which will be enforceable by a planned aviation consumer protection authority.
A separate, and independent, consumer ombuds scheme will handle individual consumer complaints that can’t be settled directly with the relevant airline or airport.
King said the clarity for consumers, airlines and airports would help customers, and if they didn’t get a response from the airlines, they could go to the ombuds scheme.
She said that while international airlines should be covered by the new regulation, a final determination on the matter would be made closer to the time of legislation.
Consumer rights experts and advocates have repeatedly pointed to Europe’s laws on passenger rights, known as EC261, which set out clear financial penalties for carriers when their cancellations or disruptions affect customers.
The Australian economy was worth $US1.797 trillion ($2.73 trillion) in 2024, according to the Bureau of Statistics, compared with Europe’s $US19.4 trillion in 2024, with 27 member states.
King said that as a small market, Australia had a unique challenge. “You think about the sheer size of the population that is in Europe and the number of airlines that are flying through there. They are able to disperse the costs of that compensation scheme through a much bigger population and much bigger airlines and airports,” she said.
“We assess the costs of Australia of implementing a scheme like that would have meant that we would have seen ticket prices go up. And that was our concern.”
When asked about future costs for the sector, Virgin Australia chief executive Dave Emerson, speaking at the same event, said: “Looking three to five years out, I’m looking at the wave of cost inflation coming at our industry.”
He cited ambitious capital expenditure to improve or build airports, costs for buying and servicing aircraft, as well as “the policy settings around consumer protections, and those are good things, but they’re going to cost money”.
“We look at the places where the cost of our input is going to go up significantly faster than inflation and disposable consumer incomes, and this has the potential to slow the growth of air travel, which is something none of us want,” Emerson said.
The minister’s update on the progress of the ombuds scheme comes as consumer advocates continue to call for strong and clear rules on compensation.
UNSW School of Aviation senior lecture Dr Ian Douglas said the aviation sector’s fears that European-style regulation would destroy airline profitability were unfounded.
Airlines in Europe could cancel flights in advance without penalty, said Douglas. They could also rebook passengers onto other services that result in them arriving within the legally defined time frame, he said.
“Flight frequency and traffic density along the major Australian east coast routes would also permit the rebooking of passengers onto other flights with limited impact,” said Douglas.
The key distinction between Australia’s planned Aviation Consumer Ombuds scheme and the EU’s regulation was in the financial compensation, said Griffith University adjunct associate professor Graeme Hughes.
While in Australia, airlines would be mandated to provide meals, refreshments, rebooking or overnight accommodation, and an independent scheme would be established to resolve disputes, Hughes said, the EU regulation was defined by its provision for mandatory, fixed financial compensation for delays of three hours or more, cancellations and denied boarding.
“The EU regulation is the gold standard, so straightforward and clear,” he said. “It defines what a passenger is entitled to. The EU’s regulation that ties the financial compensation side into it. It’s the gold standard and one I would like to see extended to our market.”
The EU legislation has had flow-on effects too, encouraging the growth of a cottage industry of businesses that – for a fee – help eligible consumers obtain their funds from airlines.
The Albanese government has made reform of aviation consumer rights a priority, following criticism of its handling of competition issues surrounding Qantas.
Its initial rejection of Qatar Airways application to add 21 weekly flights into Australian cities in 2023 raised questions about whether the government was shielding the airline from overseas competition.
Last year, the Albanese government relented, allowing Qatar Airways to increase its flights into the country as part of an agreement with Virgin Australia, which allowed the latter airline to fully realise a new business plan and relist on the ASX.
King – who, when asked about her favourite plane said she was “very fond” of the “very comfortable” Boeing Dreamliner – has overseen the transportation portfolio since 2022. She reflected on Qantas’ role not just in commercial competition but also in Australia’s national interest.
Because the airline must be 51 per cent Australian-owned by its charter, its role as Australia’s airline in a commercial sense caused controversy, she said. But Qantas also has a role to play “when something goes wrong” and Australia wanted to get its people home from abroad.
“In my view, it has responsibilities because of that,” said King.
Qantas assisted in repatriating Australians during the COVID outbreak in 2020-2021 and from Lebanon in 2024 when Israel invaded.
“That’s actually a role that Qantas plays that is often not understood well,” King said.
Chris Zappone travelled to the Gold Coast as a guest of the Australian Airports Association.
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