CHOICE has asked the ACCC to determine whether a market study into the airline industry is warranted to investigate and assess systematic consumer protection issues. This should include investigating the true cost of cancellations, reasons for delays and cancellations, internal complaints handling processes and remedies available to consumers.
The ACCC has also been asked to take action against airlines that refuse to remove prominent, blanket “no refund” claims in the booking process.
In a series of two articles, we will look at the essence of CHOICE’s complaint including what obligations the airline industry and travel management companies have under Australian consumer laws; the need to balance cost and flexibility for both suppliers and consumers; and what the stakes are for non-compliance.
Part 1: An industry pushing the boundries
At the heart of the CHOICE campaign is a call for urgent enforcement action to ensure that the airline industry is compliant with the Australian Consumer Law (ACL).
The call is backed by claims of excessive fees, unfair terms and poor complaints-handling.
“CHOICE has found that airlines push the boundaries with, and appear to breach, the consumer law with no regard and little consequence. For example, while businesses across the country are clearly banned from making blanket ‘no refund’ claims, consumers are told that flights are not refundable when booking with three out of Australia’s four major airlines”.
The claim specifically identifies no-refund clauses in many fare types:
Airline Refund Policies
|Virgin||Elevate||Change permitted until midnight prior to scheduled departure + AUD50 fee|
|Virgin||Go and Go Plus||Change permitted until midnight prior to scheduled departure + AUD100 fee|
|Virgin||Premium Saver||Change permitted until 24 hours prior to scheduled departure + AUD50 fee|
|Virgin||Premium||Change permitted until 24 hours prior to scheduled departure|
|Virgin||Business Saver||Change permitted until midnight prior to scheduled departure + AUD50 fee|
|Jetstar||Starter fare with Plus bundle||No refund|
|Jetstar||Starter fare with Max bundle||Refundable for a fee|
|Jetstar||Starter fare with FlexiBiz bundle||Jetstar voucher, other refunds not available|
|Jetstar||Business Class||No refund|
|Jetstar||Business Class with Max bundle||Refundable for a fee|
|Tigerair||All fare types||Tigerair operates a no-refund policy and as such it is unable to refund any tickets (fares and charges) where the passenger decides they no longer have a requirement to fly or are unable to travel.|
CHOICE points out that each airline clearly tells consumers that they are, in many circumstances, not entitled to a refund – despite a consumer’s right to refund under the consumer guarantees and the airlines’ acknowledgement of this in their Conditions of Carriage.
It further argues that while the airlines do disclose terms and conditions, booking time limits make it difficult for the consumer to digest them before accepting and paying for a flight.
“When a consumer purchases a flight, they enter into a standard form contract with the airline. This contract is referred to by airlines as the Conditions of Carriage. This contract outlines how a passenger can obtain a refund and the airline’s obligations under the ACL. The Conditions of Carriage are available on each airline’s website, at the checkout in the online booking process and via a link in the passenger’s e-ticket upon purchase."
“A link to the Conditions of Carriage is made available to the consumer during the booking process. Passengers also must agree to the Conditions of Carriage at the point of sale by checking a small box before payment. Consumers can read the Conditions of Carriage by clicking the hyperlink to the full document. The link to this document is also often bundled with links to other relevant sections of the airlines’ websites, such (as) information for passengers with disability or other special needs."
“Consumers need to complete their booking within the website’s booking time limit. It would be impossible to read the Conditions of Carriage in full and purchase their ticket within the time allotted.”
Conditions of Carriage - length of contract.
|Understanding the terms|
|Airlines||Conditions of Carriage||Average reading time needed|
|Qantas||13,025 words||52 minutes|
|Virgin||10,861 words||43 minutes|
|Jetstar||9,602 words||38 minutes|
|Tigerair||6,682 words||27 minutes|
CHOICE contends that current “no refund” claims cause two kinds of consumer detriment: risk-averse consumers may purchase flexible fares (at a higher value) believing that they will not be entitled to a refund under any circumstances, even if those circumstances include major or minor failures caused by the airline. Similarly, consumers purchasing sale or low cost fares may not be claiming for refunds for major or minor failures (for example, after a flight is cancelled and the booking not fulfilled), as they did not read beyond the very prominent “no refund” claim made in the fare rules at the time of booking.