There are no rules in Australia which lay down air passenger rights to compensation for flight delays and cancellations, unlike in Europe where EU Regulation 261/2004 and in the USA where the DOT ‘Fly-Rights’ lay down rules that airlines must follow.

The responsible Authority, the Australian Competition & Consumer Commission (ACCC) takes a ‘light-handed’ approach. That is, so long as the airline industry complies with the Australian Consumer Law, and the Airline Consumer Advocate is dealing with complaints, then the ACCC does not need to lay down rules for passenger compensation for flight delays and cancellations.

It therefore represents a significant advance for air passenger rights in Australia that the ACCC has set out compensation guidelines for flight cancellations by AirAsia X.

The ACCC Media Release – AirAsia X commits to process for customers affected by cancelled Kuala Lumpur and Denpasar flights 21 April 2015

What did the ACCC investigate?

The ACCC investigated two instances of flight cancellations:

  • Melbourne – Denpasar to start from 26 December 2014, cancelled because the Air Operator’s Certificate had not been issued by CASA
  • Adelaide – Kuala Lumpur to cease from 25 & 26 January 2015, cancelled for operational reasons

How did AirAsia X handle the flight cancellations?

In the first instance, AirAsia X gave passengers who had booked flights the option of being re-routed via Kuala Lumpur.

In the second instance, AirAsia X required passengers to either cancel their flights and re-book on other airlines or make their own way to Melbourne or Perth to catch a flight.

In both instances, passengers had disrupted travel arrangements and incurred additional out-of-pocket expenses.

What approach did the ACCC require AirAsia X to take?

“Consumers are entitled to compensation for any reasonably foreseeable loss due to the failure of a business to deliver a contracted service, and these claims should be dealt with promptly,” ACCC Chairman Rod Sims said.

“It is very important that any business has in place systems and processes to properly handle and consider customer refunds and that they can adjust quickly when things go wrong and there is an increase in the number of claims,” Mr Sims said.

Following discussions with the ACCC, AirAsia X has published a notice on its website advising that for consumers affected by the cancellation of its Melbourne/Denpasar and Adelaide/Kuala Lumpur services:

  • all outstanding requests for alternative flights, credits and refunds have now been processed;
  • AirAsia X is committed to process any future requests for alternative flights, credits and refunds within 14 days ;
  • AirAsia X will expeditiously process valid claims for reasonable out of pocket expenses for affected passengers in a fair and reasonable manner;
  • customers can re-lodge claims previously made to AirAsia X for re-assessment; and
  • a report on the handling of claims for out of pocket expenses will be provided to the ACCC.

(this section is an extract from the Media Release)

What could the ACCC learn from EU Regulation 261/2004?

The Australian Consumer Law is scheduled for review in 2016. This review would provide a fine opportunity for the ACCC to lay down rules for airlines on how to deal with passengers whose flights are cancelled.

In that context serious consideration should be given to adopting these rules from EU Regulation 261/2004, namely:

Airlines which depart from or fly into a European (EU member) airport must assist the passengers if they cancel a flight within 14 days of the departure date. This assistance applies irrespective of whether the cancellation is inside or outside of its control. The rules are:

  • The airline must inform passengers of a cancellation as soon as they become aware of it, and provide an explanation. 
  • The airline must give passengers the choice of re-routing to the same destination under comparable conditions on the next available flight (or on a later flight, if requested); or refund the air fare and, if they are at an ‘away’ port, provide a return flight to the point of first departure.
  • The airline must provide refreshments, meals, communications (such as a free phone call), and, if necessary, overnight accommodation, depending on the flight distance and length of delay until the rebooked flight.

EU Regulation 261/2004 goes on to require cash compensation to be paid, if the flight is cancelled because of circumstances within the airline’s control. This part of the regulation is controversial, and does not appear to be justified in the Australian regulatory regime where the ACCC could be expected to take action against airlines which are ‘serial offenders’ in terms of cancellations.