Jetstar Faces AU$2m(FJ$3m) Fine, Other Airlines Shamed Over Refund Rights
Airlines have been put on notice that they must be fairer with travellers over refunds, with Jetstar facing an almost AU$2 million(FJ$3 m) fine for misleading its customers about their legal rights.
All four of Australia’s major airlines have entered court-enforceable undertakings with the consumer watchdog to change their refund policies after they were caught lying to customers about access to refunds when a flight was delayed or cancelled. “For too long the airlines have been ignoring consumers’ rights for refunds,” said Australian Competition and Consumer Commission chair Rod Sims. “You cannot say there are no refunds - no matter how cheap the ticket is, no matter what ticket you buy.”
Each airline said it would reassess customer complaints that had earlier been knocked back for refunds and the ACCC urged travellers who had been refused a refund to contact their carrier. Mr Sims said Jetstar was the worst offender, making claims on its website that consumers could only receive a refund if they bought a more expensive fare, and that standard consumer guarantees did not apply to its flights.
The ACCC took Jetstar to court over its breaches and the pair have agreed on a AU$1.95 million(FJ$2.9 m) fine, which has been submitted to the Federal Court for approval. Tigerair was pulled up for telling consumers they could get a refund only if they paid a “refund admin fee”, while Virgin stepped out of line by saying no refunds were available on some fares and that consumers could only receive credit vouchers valid for 12 months.
Qantas agreed that it might have misled consumers into thinking they could not get a refund on “Red e-deal” fares and that consumer law guarantees did not apply to its flights. Under the law, consumers may be entitled to a refund if a flight is significantly delayed or cancelled for a reason within the airline’s control and the airline cannot put the passenger on an alternative flight in a reasonable time.
While what constitutes “reasonable” was not black and white, Mr Sims said the starting point for consumer was knowing they were entitled to recourse in the first place.
The law does not automatically entitle consumers to a refund if they change their plans or miss their flight - but this might be included as a condition in some fare types.
Each Australian airline has their own policy for when and how they will compensate passengers for delayed or cancelled flights.
Many other jurisdictions have fixed compensation schemes for passengers who are put out.
In the European Union for example, passengers who land more than three hours late can receive compensation of up to 600 ($945). New Zealand also has a fixed compensation scheme in place. Mr Sims said he expects the airlines to improve their behaviour after agreeing to the enforceable undertakings, while the possible penalties they faced for that kind of offence increased last month - from up to AU$1.1 million(FJ$1.6 m) per breach to up to the greater of AU$10 million(FJ$15 m) or 10 per cent of turnover.
The ACCC alleged three breaches against Jetstar.
Jetstar chief executive Gareth Evans said the airline took its legal obligations seriously and had worked closely with the ACCC to update its terms and conditions to ensure compliance and make it easier for customers to understand their rights.
“Like other low-fares airlines in Australia and around the world, customers who purchase our cheapest fares cannot get a refund if they decide they no longer wish to travel,” Mr Evans said. “For customers who are likely to change their mind or need flexibility, we have a number of fare types that give them that option.” A spokeswoman for the Virgin Australia Group, which operates Virgin and Tigerair, said the company was committed to ensuring its policies aligned with the law and looked forward to working with the ACCC on the matter.
Gareth Evans Jetstar Chief Executive For customers who are likely to change their mind or need flexibility, we have a number of fare types that give them that option