Australia’s aviation sector too small for EU-style compo : King
The federal minister overseeing the project said Australia’s aviation industry was too small for a European-style consumer aviation compensation scheme that penalized airlines for errors in their control, but he was confident the framework, due to come into force next year, would protect consumers.
Transport Minister Catherine King said the Consumer Aviation Ombudsman would be effective, although it could not force airlines to compensate passengers affected by cancellations and disruptions.
Glenn Hunt/Age.
Speaking on the sidelines of the Australian Airports Association National Conference on the Gold Coast on Tuesday, King said the scheme would be set up outside the Department of Infrastructure.
“We looked at Australia’s jurisdiction and how the Australian market works and created a model like this: [the Aviation Consumer Ombuds] … in the Telecommunications Industry Ombudsman program – this is it [it has] It was similar in terms of consumer relations.
“Obviously my department looked at Europe, it looked at America, it looked at Canada, but that’s why we created a uniquely Australian plan.”
The Telecommunications Industry Ombudsman is funded by industry members.
King’s office has received submissions on the proposed regulation and will share details of the decisions in the coming weeks. The changes are planned to be enacted next year.
Minimum standards for consumers will be set in an aviation consumer protection regulation that may be implemented by a planned aviation consumer protection authority.
A separate and independent consumer ombudsman program will address individual consumer complaints that cannot be resolved directly with the relevant airline or airport.
King said clarity for consumers, airlines and airports would help customers and if they don’t get a response from airlines, they could go to the ombudsman program.
He said that the new regulation should also cover international airlines, but the final decision on the issue will be made as it approaches the time of enactment.
Consumer rights experts and advocates have repeatedly pointed to Europe’s passenger rights laws, known as EC261, which provide clear financial penalties for carriers when cancellations or disruptions impact customers.
Australia’s economy is worth US$1.797 trillion ($2.73 trillion) in 2024, according to the Bureau of Statistics, compared to Europe’s, with 27 member states, at US$19.4 trillion in 2024.
As a small market, Australia faces a unique challenge, King said. “Think about the size of the population in Europe and the number of airlines flying from there. They are able to spread the costs of this compensation scheme across a much larger population and much larger airlines and airports,” he said.
“We consider that implementing such a scheme in Australia would mean ticket prices would increase. And that was our concern.”
Speaking at the same event, Virgin Australia chief executive Dave Emerson said when asked about the industry’s future costs: “As I look three to five years out, I’m looking at a wave of cost inflation coming through our industry.”
He cited ambitious capital expenditure to improve or build airports, the costs of purchasing and maintaining aircraft, as well as “policy regulations around consumer protection, and those are good things, but they’re going to cost money.”
“We’re looking at places where the cost of our inputs will rise significantly faster than inflation and disposable consumer incomes, and that 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 ombudsman scheme comes as consumer advocates continue to call for strong, clear rules on compensation.
UNSW Aviation School senior lecture by Dr. Ian Douglas says the aviation industry’s fears that European-style regulations will destroy airline profitability are unfounded.
Airlines in Europe can cancel flights in advance without penalty, Douglas said. They can also rebook passengers on other services that will ensure they arrive within the legally defined time frame, he said.
“Flight frequency and traffic congestion along Australia’s east coast major routes will also allow passengers to rebook other flights with limited impact,” Douglas said.
Griffith University assistant professor Graeme Hughes said the key distinction between Australia’s planned Aviation Consumer Ombudsman program and EU regulations was in financial compensation.
In Australia, airlines will have the power to provide meals, drinks, rebooking or overnight accommodation and an independent plan will be established to resolve disputes, Hughes said The EU regulation is defined by a mandatory, fixed financial compensation provision for delays of three hours or more, cancellations and refusals of boarding, Hughes said.
“EU regulation is the gold standard, it is that simple and clear,” he said. “This defines what a passenger is entitled to. The EU regulation also ties the financial compensation part to it. This is the gold standard and I would like it to be applied to our market.”
EU legislation also had flow-on effects; It spurred the growth of a cottage industry of businesses that helped eligible consumers get their funds from airlines – for a fee.
The Albanian government has made aviation consumer rights reform a priority following criticism over its handling of competition issues surrounding Qantas.
Qatar Airways’ initial rejection of its application to add 21 weekly flights to Australian cities in 2023 raised questions about whether the government was protecting the airline from overseas competition.
Last year the Albanian government relented and allowed Qatar Airways to increase flights to the country as part of a deal with Virgin Australia; This allowed Virgin Australia to fully implement a new business plan and rely on the ASX.
When asked about his favorite aircraft, King said that he “loves” the “very comfortable” Boeing Dreamliner and has been managing the transportation portfolio since 2022. He considered Qantas’ role not only in business competition but also in Australia’s national interest.
He said its commercial role as Australia’s airline had sparked controversy as the airline had to be 51 per cent Australian-owned. But Qantas also has a role to play when “something goes wrong” and Australia wanted to bring its people home from abroad.
“That’s why they have a responsibility, in my view,” King said.
Qantas helped repatriate Australians during the COVID pandemic in 2020-2021 and from Israeli-occupied Lebanon in 2024.
“This is actually a role that Qantas plays that is often not well understood,” King said.
Chris Zappone went to the Gold Coast as a guest of the Australian Airports Association.
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