Australia’s competition watchdog says the “excessive” fees airlines impose when passengers cancel flights is a major cause of complaint among the travelling public and a potential breach of the nation’s consumer laws.
The findings were part of an Australian Competition and Consumer Commission’s (ACCC) report, Airline: Terms and Conditions, published on Wednesday.
ACCC chairman Rod Sims said the 1,400 complaints by consumers with the ACCC about airlines between the start of 2016 and December 2017 had “some very consistent themes and bugbears”, including no refund statements, excessive fees for cancelling or changing flights, and issues relating to consumer guarantees.
“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,” Sims said in a statement.
“A major issue for consumers is excessive fees for flight cancellations. While airlines are free to differentiate their fares based on flexibility, they should not impose fees that are disproportionate to the original fare.”
Sims noted travellers, like all consumers, were protected under the Australian Consumer Law (ACL) from “unfair contract terms where they have little or no opportunity to negotiate with businesses”.
“It is completely inadequate to have ‘no refund’ statements qualified in obscure fine print. 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 their customers are entitled to without delay or excuse. The ACCC will engage with the airlines about the concerns raised in our report to discuss our expectations for change. Where consumer issues continue, the ACCC will likely look to take action,” Mr Sims said.
The ACCC report noted that while airlines often had “no refund” conditions for certain sale or discount fares, it was not correct for consumers to believe that they were not entitled to a refund under any circumstance.
And while the conditions where a refund could be obtained was included in the airlines’ conditions of carriage, the ACCC said it was “concerned that these qualifications are not sufficient to clarify the initial and prominent no refund representation”.
“The Airlines’ Conditions of Carriage are lengthy, often in fine print, and it can be difficult for consumers to find the relevant information,” the report said.
“The ACCC will continue to monitor how information about refunds is conveyed by the Airlines, and take enforcement steps where broad and misleading ‘no refund’ claims are made.”
On excessive fees for cancellations and changes, the ACCC report noted a consumer who bought four return tickets from Los Angeles to Sydney for a total cost of $3,500 was charged a fee of $500 per person when they cancelled the flights 35 days prior to departure. This represented 57 per cent of the total fare.
The ACCC said it recognised airlines did differentiate fares with different levels of flexibility, adding “this is not problematic in itself”.
“However, where the size of the fee imposed by the airline to cancel or change a flight is disproportionate to the cost of the original fare, or is unrelated to costs, then concerns may arise,” the ACCC said.
“The ACCC is particularly concerned with fees imposed by airlines where the charges are the result of decisions or circumstances within the control of the airline rather than the consumer.”
“Another example of a term that may amount to an unfair contract term is one which enables the airline to penalise a consumer for breaching or terminating the contract, but does not penalise the airline for breaching or terminating the contract.
“From the complaint data, there appears to be an imbalance in rights between consumers and the Airlines, and the Airlines are entitled to make unlimited changes whereas the consumer is financially penalised for making even minor adjustments.
“The ACCC will be engaging with the Airlines to understand exactly how, when and why these fees are charged, and is likely to take action where unfair contract term provisions are identified and not addressed.”
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