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Federal Transport Minister Catherine King has said an EU-style “pay-on-delay” compensation scheme would drive up airfares in Australia.
Speaking to ABC Radio in Sydney, the minister said that while a scheme similar to EU 261 – which forces airlines to compensate passengers for delays and cancellations within their control – works in a populous region like Europe, the Australian market is too small to sustain one.
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“It is costly to administer compensation schemes. Those costs are generally passed on to passengers,” she said.
“So, I didn’t want a scheme that was also going to send ticket prices skyrocketing, because they’ve already been pretty high. They’re sort of plateauing a little bit more and coming down a little bit, but post-COVID, the demand is really strong there.
“We love to travel, so that was one of the things I had to balance. But we want to make things better and get continuous improvement for people, for the travelling public.”
The minister’s comments come after the conclusion of a consultation period on the federal government’s proposed airline customer protections, which attracted more than 160 submissions.
While the minister did not rule out a compensation scheme in the future, she said that the government had never intended to introduce one.
“We are intending to introduce a scheme that gives minimum standards and provides a simple set of remedies for people when there is baggage lost, planes, delayed or they have had an experience that is very detrimental within an airport or within an airline,” she said.
“Those things could include, as part of the consultation, when accommodation should be provided at what standard, when meals should be provided, and what the costs of those should be. When refunds should be provided and making it easy for people to get immediate refunds.
“This is a really complex area, as you know, every time you buy a ticket, you’re entering into a contract with an airline or a travel agent to actually purchase a good or a service, and the terms and conditions of those are really complex and varied across every single flight, every single ticket.
“We’re trying to really get a minimum set of standards that airlines and airports have to adhere to, and a simple remedy for people to do that.”
Last year’s Aviation White Paper put a heavy focus on consumer protection, including the adoption of a charter of customer rights and an independent ombuds scheme.
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