Are you being served?

As price has become king – particularly among low cost carriers – the number of complaints from the travelling public has been on the rise. In many cases, these have related to issues of failing to make check in on time when carriers have now adopted strict check in closeoff times, while others have been of a more serious nature.

The issue was not missed by the federal government, which addressed consumer protection measures as part of the Aviation White Paper, although it appears to have taken a back seat to some of the other policy initiatives produced in the paper. “Misunderstandings about service level standards and check-in times can sometimes lead to dissatisfaction for customers, who sometimes feel that airlines have not been clear about ticket conditions. This can lead to challenges for airline staff in managing and resolving complaints,” read the White Paper.

The paper noted that there were changes being made to consumer protection and contract laws which in some cases would boost the rights of passengers when they buy an air ticket. Nevertheless, the paper also noted that there were particular areas where the industry had been falling behind in.

Predictably, during the process of developing the policy a number of airlines and representative bodies said in their submissions that they believed that their customers were being adequately protected by existing laws. International airlines, through the united voice of the Board of Airline Representatives of Australia had argued in a response to the original issues paper that it “does not believe there is any evidence regarding their behaviour that would warrant specific and more stringent consumer protection measures being introduced for airlines. The incidence of airlines defaulting on their commitments to passengers on a significant scale is very rare.”

Similarly, in its submission to the process, Tiger Airways had argued that the current protections and processes “strike an appropriate balance between consumers and encouraging low fare competition in Australia.” The Qantas Group and Virgin Blue appeared not to directly address the issue of broad consumer rights in their submissions on the process.

Recent experience also shows that there have been issues with some of the conditions put on by low cost carriers onto their cheapest tickets, with at least two instances going before the courts in challenges to the conditions which passengers must agree to when buying a ticket.

In one example, a Jetstar passenger who on-sold their ticket challenged the carrier’s charges for name changes in the Victorian Civil and Administrative Tribunal (VCAT), which upheld the case. Jetstar later challenged and overturned the decision in a higher court.

On another occasion, Crikey.com.au contributor Adam Schwab successfully sued Virgin Blue for a cash refund of an airfare on a cancelled flight. The action, which was also undertaken in VCAT, upheld Schwab’s argument that the cancellation of the flight, which was incorrectly booked due to an error in switching between schedules, represented a breach of contract and thus he was eligible for a cash refund, rather than the airline’s practice of a credit for future travel.

As well as complaints about the nature of travel conditions, the White Paper also made note of the increase in complaints as Jetstar, Tiger and Virgin Blue have taken their place in the market. “The airline industry has been the subject of an increasing number of complaints since the advent of the low-cost airline model,” read the paper. “The Government considers it is in the industry’s best interests, as well as in the best interests of consumers, to improve its complaints–handling procedures and standards.”

While the white paper also addressed the role of existing consumer protection laws and principles of contract law, one area which was highlighted was the procedures among airlines to dealing with and resolving customer complaints.

“While the Government will continue to afford airlines considerable flexibility in the way they manage and respond to consumer expectations, the Government will maintain — and strengthen where appropriate — its role in setting minimum benchmark standards for airline behaviour,” read the White Paper.

But in the same breath, the government also backed away from imposing any minimum standards of service or consumer protection measures through legislation – at least for now. “The Government is reluctant to burden industry with further regulations in this area, and is confident airlines are committed to constantly improving the services they offer to the Australian public.”

Instead, the recommendations in the paper appear to put the burden back on the industry to come up with its own solutions. In particular it recommends that airlines adopt their own corporate charters for dealing with customer complaints. It also encourages the industry to establish its own ombudsman to independently handle complaints where customers feel that they may not have been properly dealt with by the airlines.

Nevertheless, it also noted that could take action in the future. “The Government will monitor the industry’s efforts to develop proposals to better handle consumer complaints over the coming year, and will consider a more interventionist approach should this become necessary.”

That has been a contrast to some other countries, such as the EU and US, where lawmakers have in recent years set about creating regulations aimed at guaranteeing passengers minimum service levels, as well as procedures to cover flight delays and cancellations.

In the case of the EU, Regulation 261/2004 sets forth cash payments that the airlines must make in the event of a significant flight delay or cancellation. In the US, the approach taken is to fine airlines who fail to allow passengers to disembark from an aircraft which has been delayed significantly, as well as requiring airlines to have customer service plans which are audited for compliance.

Locally, there have been few moves from carriers to address the recommendations put down for the industry in the white paper. So far, the only carrier to have taken action on the recommendation of a corporate charter is Jetstar, which in February launched its customer service guarantee. The 10 point charter sets out guaranteed levels of service in response to disruptions, refunds and other enquiries. The carrier has also set its own penalties, with the airline to provide compensation in the form of travel vouchers for any violation of its charter.

“A low fares airline and guaranteeing the lowest airfares in the marketplace doesn’t mean we’re not going to deliver against good service, and this is our visible demonstration to our customers that we genuinely care,” said Jetstar CEO Bruce Buchanan in launching the guarantee.

Initially panned by many industry pundits as a clever piece of marketing, particularly for its inclusion of “soft marketing statements”, such as “you will get what you paid for” and “our team are always here to help.” Many also noted that the charter was likely an attempt to try and take some of the heat out of some customer service blunders which ended up making national headlines over the year.

On Jetstar’s part, it says that the guarantee will be a living document, and says that it has set forth a process to update it. It even notes that it is taking other steps, such as a staff engagement program and establishing a panel of consumer advocates to guide the process going forward. It has also rolled out the guarantee wider than Australia, including its Singaporean and New Zealand operations under the charter.

Since the release of the guarantee document in February, there appears to have been little progress, with no other carriers announcing similar charters or guarantees at the time of writing.

Similarly, there appears to be little movement on the issue of an independent industry ombudsman, as suggested by the White Paper. In part, it seems that Jetstar’s plan to establish its panel to guide the future of its charter may be aimed at introducing some independence into the complaint handling process. Whether this will remain sufficient to satisfy the aims of the government policy, and the end consumers, could be hard to predict.

The commitment of the government to improving the complaint handling process also appears to be in doubt. With the election due to take place before any likely review of the measures taken by airlines, it appears unlikely that the issue will take priority.