Coalition Senator Bridget McKenzie is advocating for a mandatory compensation scheme for flight cancellations and delays, but major Australian airlines have voiced strong opposition during a recent Senate committee hearing.
Qantas argued that adopting a European Union-style compensation system could lead to higher ticket prices for passengers. Markus Svensson, Qantas Domestic CEO, told the Senate inquiry on passenger rights that such a scheme would not reduce delays or cancellations and could instead increase travel costs.
“Compensation systems in places like Europe and Canada haven’t improved outcomes for consumers in terms of fewer delays or cancellations. They’ve also driven up the cost of travel,” Svensson said. He added that the potential impact on airfares, low-cost carriers, and regional routes—especially in Australia’s regional network—should be carefully considered.
The Australian Travel Industry Association (ATIA) supports reforms to simplify refund processes and ensure timely refunds. However, it emphasized that airlines, not travel agents, control fare terms and conditions and hold consumer funds when tickets are purchased through third parties. Travel agents, ATIA noted, cannot provide refunds for funds they do not hold.
The “pay on delay” legislation, introduced last year by the Coalition, is separate from an Ombuds Scheme backed by the Albanese government. The Ombuds Scheme would impose penalties on airlines for flight delays, cancellations, or denied boarding.
Senator McKenzie told the Senate committee that the “pay on delay” scheme is necessary to restore public trust in airlines like Virgin Australia and Qantas, which she said has been eroded.
The debate continues as stakeholders weigh the potential benefits of consumer protections against the possible economic impact on the aviation industry.
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