Opinion: Time for a fresh look at ‘pay-on-delay’

Under the EU’s regulation EC 261 (often just called EU261), meanwhile, passengers have minimum rights regardless of the reason their plane is delayed or cancelled, ranging from meals and refreshments to accommodation and compensation, depending on the circumstances.

There’s been talk of a compensation scheme like this in Australia floating around for some time, and in the last parliament, the Coalition introduced its Airline Passenger Protections (Pay on Delay) Bill to try and implement one – met with, of course, fierce pushback by the airlines. In its submission last year to the Senate inquiry on the bill, peak body Airlines for Australia and New Zealand (A4ANZ) argued that it would increase the cost to passengers and paradoxically make delays more likely.

“Before promoting airline compensation schemes as a silver bullet for Australian consumers – as a number of recent statements by Senators appear to be suggesting – A4ANZ asks the Committee to note that, under the frequently-referenced EU261 compensation regime customer complaints have increased since its introduction, with the scheme placing upward pressure on airfares,” wrote then-CEO Dr Alison Roberts.

“In Canada, another jurisdiction often held up as an example for Australia to follow, consumer protection regulations introduced in 2019 have resulted in a large – and growing – backlog of unresolved consumer compensation complaints (71,000 as at April 2024). ” Qantas Domestic chief executive Markus Svensson warned the committee in person of “ambulance chasers” looking to exploit people claiming under EU261 and insisted there is “absolutely no incentive” to cancel flights.

In the end, the airlines got their wish: earlier this year, the majority Labour senators on the committee voted to recommend the bill not be passed, and there the matter would seem to end – though not before a few choice words from McKenzie.

“Labour’s refusal to back this bill leaves Australian travellers with fewer rights than passengers in the EU, the UK, Canada, and even the United States,” she said in a scathing press release. “This is not just about making up for lost time or missed connections. It’s about fairness, accountability and restoring public confidence in a sector that many Australians feel is rigged against them. ” Now, to its credit, the government has put a spotlight on consumer protections in its White Paper released last year, with a draft released in December for the “Aviation Customer Rights Charter” as well as the implementation of a new independent ombuds scheme to replace the ineffectual industry-run Airline Customer Advocate.

However, according to McKenzie, these don’t go far enough – they’re a “bureaucratic fig leaf” comprising a “vague, six dot point charter and a toothless ombudsman scheme”.

Consumer advocate Adam Glezer, who gave evidence to the inquiry, also said “pay-ondelay” won’t have the dire effects the airlines say it will – he pointed out that the estimated cost of compensation per passenger across the EU and UK was the equivalent of between 95 cents and $1. 89.

Now that the dust has settled on the election, and with the customer rights charter still under review, perhaps the government should look at dusting off the idea of a compensation scheme – rightly or wrongly, it’s true that many Australians feel like the major airlines don’t have their best interests at heart.

(Am I biased because of that one time last year a cancellation stranded me in Melbourne for two days and I had to rely on travel insurance to recoup my costs? Maybe.)

The point is, a scheme with some legal teeth behind it could be good for the flying public, good for confidence in the industry, and good for Labor’s future political prospects as the party that told the airlines to give their customers a fair go.