New Consumer Protection Laws in Australia

1023
April 23, 2015

An agreement brokered by the Australian competition regulator virtually locks in new standards of consumer protection for all international travellers stranded when flights to and from Australia are cancelled.

The Australian Competition and Consumer Commission intervened after AirAsia X had to cancel its four-times-weekly service between Melbourne and Denpasar, Bali, because it was denied official authority to operate the route by the Australian Civil Aviation Safety Authority.


AirASia X was forced to cancel scheduled Melbourne – Denpasar flights leaving passengers stranded.

Backed by stronger powers under the Australian Consumer Law, the ACCC has now extracted a comprehensive agreement on restitution for passengers affected by the cancellation of the Melbourne-Bali service late last year.

AirAsia X had “bet” that its application for permission to fly the route would be approved in time for the Boxing Day launch, but that clearance didn’t arrive until March.

AirAsia X rerouted passengers who had booked tickets on the new service via existing services to Kuala Lumpur, Malaysia.

Under the deal brokered by the ACCC this week, “all outstanding requests for alternative flights, credits and refunds have now been processed”, the commission said. As well:

– AirAsia X is committed to process any future requests for alternative flights, credits and refunds within 14 days.
– AirAsia X will expeditiously process valid claims for reasonable out of pocket expenses for affected passengers “in a fair and reasonable manner”. And,
– customers can re-lodge claims previously made to AirAsia X for re-assessment.

Speaking to Airlineratings.com, ACCC chairman Rod Sims hailed the agreement as a new template for the airline industry.

“Obviously, it doesn’t mean that everytime someone’s flight’s delayed for a couple of hours, the airline’s got to do something about it,” Sims said. “It’s got to be a significant event.

“But the sort of event we’ve got here is a very good example of where some form of restitution is required and, to the extent that this clarifies that, this is a very important outcome.

“Our objective here was to get quick restitution and get it understood that that’s what’s required. We didn’t want to take anyone to court here. We just wanted to sort out what these responsibilities are.”

Sims praised AirAsia X’s co-operation, but said it had been made clear there would be consequences if it didn’t comply.

“There would have been some indication that, if that didn’t happen, other things would happen,” he said.
“We certainly applied pressure to get this outcome, but I wouldn’t want to say they came kicking and screaming. We got an outcome that we would not have got without our intervention, but I don’t want to detract from their co-operation in what we’ve got as well.”

AirAsia X won’t comment officially on the ACCC deal, but the chief executive and founder of the AirAsia group, Tony Fernandes, said recently the fallout from the case had had a bigger impact on ticket sales than the December 30 crash an A320 operated by affiliate airline Indonesia AirAsia en route to Singapore from Surabaya.

Sims says it’s in airlines’ own interests to do the right thing by their customers.

“I think the lesson here is that [reputational damage to the airline] can certainly happen,” he said.

However, Sims said the ACCC would not advocate an outright ban on airlines selling seats on new services before they are given official permission to fly them – a practice followed by many airlines, including Qantas.

“If a company does that and then doesn’t get permission and customers are out of pocket, we would certainly take very quick action,” Sims said.

“If they [airlines] make a bet and it comes off, well, that’s up to them,” he said. “But if they make a bet and it doesn’t come off, then I think we would act.”