Consumer watchdog warns Aussie airlines about refunds, fees

December 20, 2017
Jetstar strike
Jetstar could face Christmas strike action. Photo: Steve Creedy.

Australian Airlines have been put on notice by the consumer watchdog about practices such as refusing to provide refunds and charging excessive fees.

The Australian Competition and Consumer Commission has warned the airlines they may be in breach of Australian consumer law and that it expects them to address concerns raised in a report on airlines terms and conditions released Thursday.

ACCC chairman Rod Sims has told them to expect action if “consumer issues continue”.

The ACCC said it had received 1400 complaints from passengers about issues with airlines  to December 14.

These were largely concerned with Australia’s “consumer guarantee” which outlines basic rights available to all consumers.

They included concerns by consumers that airlines blamed decisions to cancel flights with low passenger loads on other problems, a claim the commission said was of significant concern and would be examined further.

“Some very consistent themes and bugbears for airline passengers emerged, including no refund statements, excessive fees for cancelling or changing flights, and issues relating to consumer guarantees,” Sims said.

“Like any business selling to local customers, airlines must comply with consumer law. We are concerned that some airlines’ policies appear inconsistent with consumers’ rights under the law.”

READ: Passengers need to read the fine print on rights.

Sims said excessive fees for flight cancellations was a major issue for consumers.

He said airlines were free to differentiate their fares based on flexibility but they should not impose fees that were disproportionate to the original fare.

The commission cited one instance where a passenger cancelled a flight between Sydney and Los Angeles for four people that cost $3500.

When the consumer cancelled the flight more than one month prior to travel, the airline charged $2000 in fees or more than 57 per cent of the original fare value.

The ACCC also sees airfare terms that  mean consumers – but not airlines – are penalised for breaching or terminating contracts as potentially amounting to an unfair contract.

In another example, a consumer booked a same day return flight from Sydney to Canberra but the flight was cancelled due to a mechanical fault.

The delay extended beyond the departure time of the passenger’s return flight but airline would provide a flight credit rather than a refund.

The ACCC noted that Australian Consumer Law meant the passenger should have been entitled to a refund but he was advised by the airline that refunds were not available.

“It is completely inadequate to have ‘no refund’ statements qualified in obscure fine print,’’ Sims said. “These blanket statements can wrongly lead consumers to think they can never get a refund, in circumstances where they can.”

Sims said airlines must deliver on remedies customers are entitled to claim  “without delay or excuse’’.

“The ACCC will engage with the airlines about the concerns raised in our report to discuss our expectations for change,’’ he said. “Where consumer issues continue, the ACCC will likely look to take action.”

Passengers were advised to retain travel documents and records of communications with airlines and contact state fair trading agencies or the ACCC with concerns.

Responding to the report, Virgin Australia said it was committed to doing the right thing by customers and reviewed its conditions of carriage on a regular basis to ensure it was aligned with Australian Consumer Law.

“We have reviewed the Report and we are interested in exploring opportunities with the ACCC that may improve the application of the consumer guarantees within the airline industry,” a spokeswoman said. “In 2018, we look forward to engaging constructively with them as this is in the best interests of our customers and the broader airline community.”

Qantas said it and Jetstar took their obligations under Australian consumer law seriously.

“The conditions that apply to every fare we sell are clearly shown when booking and our full terms and conditions can be read at any time,” a spokesman said. “These conditions are ultimately about serving our customers efficiently and giving them options about how much flexibility they need.

“Aviation is unique in many aspects from other industries, and our fares and conditions reflect that we cannot resell a seat after a flight has departed. We will discuss this in detail with the ACCC.”

AirlineRatings  has introduced the world’s first passenger rights modules aimed at helping travellers around the world understand their rights.

The issue of refunds most recently arose in Australia during the Mt Agung eruptions in Bali.

Read: Bali passengers may be able to seek a refund.