Australian airlines are acting like a “mafia of the sky” in continuing to strategically cancel flights they never intended to operate, an MP has claimed, arguing for the urgent introduction of compensation laws so carriers are deterred by immediate penalties.
Monique Ryan, the independent member for Kooyong in Melbourne, has ramped up her calls for a mandatory compensation scheme for airline passengers, saying allegations levelled by Sydney airport this week showed such laws were needed as a matter of urgency and could not wait until the government’s aviation white paper, which is due by the middle of next year.
On Wednesday, Sydney airport’s outgoing CEO, Geoff Culbert, accused Qantas – among other airlines – of continuing to strategically cancel flights out of the airport to block competition as he warned the embattled airline is making it difficult for Australians to “fall in love with Qantas again”.
Culbert aired his frustrations about “slot hoarding”, where airlines schedule more flights than they intend to run, before cancelling them in a strategic manner. If services are not cancelled more than 20%, the airline will retain the slot at the expense of new entrants wanting to launch a competing service (known as the 80:20 rule). He said he was amazed that despite recent awareness of the issue, it had not been stamped out.
Qantas group – including its budget carrier Jetstar – and Virgin have previously denied they misuse slots. However, Culbert pointed to September cancellation data that showed Jetstar had cancelled 9.9% of flights, Virgin cancelled 9.3% and Qantas cancelled 7.4% of flights on the Sydney-Melbourne route.
“Interestingly, the cancellation rate for Rex was zero,” Culbert said of the formerly regional-only carrier that has recently expanded to compete on capital city routes.
“We all want to fall in love with Qantas again but it’s hard to do so when they continue to cancel so many flights,” he said.
While airports and smaller airlines have all led calls for the Albanese government to respond to recommendations from the Harris review for legislation to crack down on the behaviour, Ryan said a broader compensation scheme instead could keep airlines to their promised schedules.
Ryan, who has called for a scheme similar to those in place in the United Kingdom and the EU, believes the issue must now be addressed as a matter of urgency.
“Airlines like Qantas are acting less like national treasures and more like the mafia of the sky,” she said.
Ryan said she was “appalled to read the outgoing Sydney Airport CEO’s allegations that Qantas deliberately cancels flights to block competition”.
“Airlines like Qantas have repeatedly shown they do not offer their customers the level of respect they deserve, and it’s time for the federal government to intervene ”
She said there needed to be better consumer protections, especially during a cost of living crisis. “Like almost all other developed countries, we need to introduce strong consumer laws that compensate air travellers for delayed or cancelled flights.”
“Not only would this protect consumer rights, it would reduce cancellations and delays. Airlines won’t be so interested in cancelling or delaying flights if they have to pay up to $100,000 in compensation per flight,” she said.
Ryan’s calls for such a scheme follow the idea being flagged in submissions by the Australian Competition and Consumer Commission, consumer advocate Choice and the Australian Lawyers Alliance to the government’s aviation green paper, with advocates keen for a scheme to be announced as part of the final white paper expected in the middle of next year.
In Europe, passengers whose flights arrive at their final destination with a delay of more than three hours are entitled to between €250 and €600 each, depending on the distance of the trip. Longer delays mean passengers can opt to be fully refunded, repaid to them within seven days. If a delay means a passenger misses a connecting flight on the same reservation, the airline must also pay compensation.
The compensation rules do not apply in situations where extraordinary circumstances, such as poor weather, caused the delays.
A spokesperson for the transport minister, Catherine King, said “we’ve heard from the industry that slot misuse is a key concern” and that the government was considering the recommendations of the Harris review.
Regarding a compensation scheme, King’s spokesperson said “the current consumer protection framework is clearly not good enough” but suggested such issues would only be addressed in next year’s white paper.
Qantas declined to comment, but the airline has previously denied allegations of slot misuse. The company’s CEO, Vanessa Hudson, in September told a Senate inquiry “the charge that Qantas is slot holding is simply wrong”.
Hudson, when asked at the same inquiry about a compensation scheme, said of the EU model: “There haven’t been any better outcomes or service outcomes for customers in those markets whereas the costs that airlines have incurred have resulted in prices going up.”
While airlines such as Qantas already offer refunds, flight credits and sometimes accommodation to passengers whose flights are cancelled, advocates say compensation laws would act as a greater cost disincentive against cancelling flights and set out hard timeframes to pay affected customers.
