Chapter 1Introduction and background
Referral and conduct of the inquiry
1.1On 16 May 2024, the Senate referred the provisions of the Airline Passenger Protections (Pay on Delay) Bill 2024 (the bill) to the Rural and Regional Affairs and Transport Legislation Committee (the committee), for inquiry and report by 18 November 2024.
1.2On 10 October 2024, the Senate granted an extension of time to report to 25 November 2024. On 25 November 2024, the Senate granted a further extension of time to report until 14 March 2025. On 13 February 2025, a further extension was granted to 24 March 2025.
1.3The committee called for submissions by publishing the inquiry on its website and writing to relevant stakeholders to invite them to make a submission by 6 June 2024. On 26 June 2024, the committee agreed to reopen submissions and extend the submission deadline to 30 August 2024.
1.4In total, 25 submissions were received and published on the committee’s website. A list of all submissions can be found in Appendix 1 of this report.
1.5The committee held a public hearing in Canberra on 17 March 2025. A list of witnesses who provided evidence at the hearing is available in Appendix 2.
Acknowledgements
1.6The committee acknowledges and thanks those individuals and organisationswho contributed to the inquiry by making written submissions and giving evidence at the public hearing.
Structure of the report
1.7This report comprises two chapters. This first chapter provides an introduction and background information, including outlining the key components of the bill.
1.8Chapter 2 examines the key issues raised by submitters and sets out the committee’s view and recommendation.
Background to the bill
1.9The COVID–19 pandemic contributed to an increase in cancellations and delays of scheduled domestic flights. However, the performance of airlines has not recovered to pre-pandemic levels. In 2023, 29.4 per cent of all flight arrivals were delayed compared to an average of 18.9 per cent since 2016; and 3.7 per cent of flights were cancelled, with the average since 2016 being 2.2 per cent.
Figure 1.1Flight Cancellation and Delayed Arrival Rates
Source: Australian Government, Aviation White Paper: Towards 2050, August 2024, p. 51.
1.10Passengers travelling to, within or from Australia are protected by basic consumer guarantees under Australian Consumer Law (ACL). ACL provides a guarantee to passengers that a service will be provided within a reasonable time if the flight is delayed or cancelled. Consumers may be entitled to a refund or replacement services depending on the circumstances that impacted their service. While ACL affords travellers some protection, additional compensation policies are usually set by individual airlines and differ between each operator.
1.11Some customers have had difficulties in accessing refunds or travel credits for cancelled or delayed services. During a second reading speech, Senator the Hon Bridget McKenzie stated that airlines have been ‘held largely unaccountable for their poor performance’ as a result of passengers often not having ‘the option of choosing other operators’.
1.12Senator McKenzie described the domestic aviation industry as a ‘duopoly’, and noted that complaints have increased as Qantas and Virgin have increased their market share:
The latest [Australian Competition and Consumer Commission] airline monitoring report confirms once again that the sector is not where it should be, as does that fact complaints to the ACCC concerning aviation have risen by nearly 200% since 2018. With around 93% of market share, Qantas and Virgin have a tighter grip on domestic air travel than another notable duopoly—Coles and Woolworths—have on the supermarket industry.
1.13According to the Australian Competition and Consumer Commission (ACCC), the considerable market share held by both major airlines has provided them with extensive market power, allowing them the ‘freedom to act without needing to worry how competitors, suppliers or customers will react’.
1.14Sydney Airport submitted that new entrants to the aviation market have found it difficult to compete because of anticompetitive practices used by incumbent airlines. Sydney Airport singled out the ‘misuse of the Sydney Airport Demand Management Framework’, which subsequently ‘blocks competitors’ access to slots and artificially raises the barrier to entry for new entrants’, as a particular tactic used by airlines to limit competition. It explained how the misuse of the Sydney Airport Demand Management Framework occurs:
Data has revealed a trend of major incumbent domestic airlines filing for more slots than required, then strategically cancelling specific flights on high frequency domestic routes such as Sydney to Melbourne, Sydney to Canberra, and Sydney to Brisbane. These cancelled flights are then consolidated and serviced by flights either side of the original scheduled departure time, but typically remaining above the 80 per cent usage requirement to retain the slots for the following year.
1.15In August 2023, the ACCC took court action alleging that Qantas had advertised and sold tickets to customers for flights that had already been cancelled. Qantas later admitted to the practice in May 2024, with around 86 000 customers impacted. While Qantas did agree to pay impacted customers in this instance, some customers have struggled to receive what they believe is adequate compensation.
1.16On 28 November 2024, to address issues with slot management, the Senate passed the Sydney Airport Demand Management Amendment Bill 2024 (Demand Management Bill). The Demand Management Bill instituted changes to the Sydney Airport movement cap to allow for controlled recovery periods when delays occur. Under the new laws, the movement cap at Sydney Airport was increased from 80 flights per hour to 85 during declared recovery periods. Such periods can be declared due to severe weather or major incidents that cause disruptions.
1.17The Demand Management Bill also replaced existing civil penalty provisions with new penalties for slot misuse. Examples of slot misuse included:
(a)failing to use an allocated slot;
(b)conducting a gate movement without an allocated slot;
(c)conducting a gate movement outside the period for which the slot is allocated;
(d)conducting flight operations otherwise than in accordance with prescribed requirements for a slot;
(e)applying for the allocation of slots without reasonably practicable plans to use the gate movements permitted by the slots; and
(f)failing to return certain unused slots to the Slot Manager, or to transfer the slots to another operator.
1.18The Hon Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government, said that the Demand Management Bill would ‘boostcompetition and improve the experience of Australian travellers’, including by strengthening customer rights. The reforms directly addressed issues with the slot system and allow ‘better access for new entrants and cracking down on airline misbehaviour’.
1.19In this committee’s final report into the Demand Management Bill, the committee expressed the view that the reforms would ‘deliver operational efficiencies, improve market competition, and better consumer outcomes’, and welcomed the strengthening of penalties for slot misuse. The committee recommended that the Senate pass the bill.
Functions and provisions of the bill
1.20The bill seeks to provide passengers with greater protections regarding delays and cancellations when flying to, within and from Australia. It does this by requiring the creation of rules obligating airlines ‘to ensure passengers are protected in certain circumstances’ laid out in the bill, and by establishing an aviation industry code of conduct. International authorities—including in the European Union, United Kingdom and Canada—have introduced similar laws to better protect consumers in the event of flight delays or cancellations, and Australian airlines are already subject to these requirements when operating in those jurisdictions.
Carriers’ obligations rules
1.21Section 4 of the bill would require the Minister for Transport to make rules regulating airlines’ obligations to their customers. Under Subclauses 4(1) and (2), such rules would need to be made within 12 months of the commencement of the bill and require consultation ‘with relevant stakeholders in the aviation industry, consumer groups and relevant agencies’. The carrier obligation rules will be required to include provisions for the following obligations:
making terms and conditions of the airline, including refund policies, clear and accessible to customers;
provision of refunds and compensation to customers in a timely manner should a scheduled flight be delayed, cancelled or in the event someone is denied boarding;
completion of a passenger’s journey when a flight is cancelled due to events outside of the carrier's control;
provision of a minimum compensation entitlement that a carrier is required to pay for lost or damaged luggage;
placement of minors under the age of 14 in close proximity to their parent or guardian at no extra cost; and
establishing minimum treatment obligations, including timely information and assistance to passengers, in tarmac delays of more than three hours.
Aviation industry code of conduct
1.22Section 5 of the bill would require the Minister for Transport to establish an aviation industry code of conduct within 12 months of the commencement of the Act. The purpose of the proposed code of conduct would be to ensure the fair and proper treatment of passengers and that passengers reach their intended destination as booked.
1.23The proposed aviation industry code of conduct must provide for recourse for passengers ‘in the event of improper conduct by carriers’ and requires that a consistent definition of a ticket apply to all tickets issued by airlines. The definition of a ticket should include ‘the minimum rights which passengers and third parties are guaranteed when they purchase a ticket of carriage from a carrier’.
Aviation White Paper: Towards 2050
1.24On 26 August 2024, the Australian Government released the Aviation White Paper: Towards 2050 (the aviation white paper) which set out the government’s vision for Australian aviation towards the year 2050. The aviation white paper has a range of initiatives ‘to ensure a safe, competitive, productive and sustainable sector’.
1.25The aviation white paper concluded that customer service standards have not returned to pre-COVID–19 levels, with ‘airline services remaining unreliable, and customers finding it too difficult to access the refunds and support to which they are entitled’. To address this, the aviation white paper advised that the Australian Government planned to establish an Aviation Industry Ombuds Scheme (ombuds scheme) and an Aviation Customer Rights Charter (the charter).
1.26The Hon Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government, said in a media release that the introduction of the ombuds scheme and the charter would boost consumer rights, increase competition and support regional and general aviation. Airlines would also have a new requirement to ‘show cause’ when flights are delayed or cancelled.
Aviation Industry Ombuds Scheme
1.27The aviation white paper signalled the intention of the Australian Government to establish an Aviation Industry Ombuds Scheme before the end of 2024 and introduce legislation to enshrine the power of the Ombudsperson by 2026. The ombuds scheme would apply to domestic airlines operating within Australia, and international airlines flying to and from Australian airports. Proposed powers available to the ombudsperson include:
providing external dispute resolution processes regarding airline and airport conduct;
setting specific remedies for customers issues that airlines and airports must abide by;
providing information to the public on the obligations airports and airlines have to their customers; and
referring potentially illegal misconduct to the ACCC, with the possibility of investigation and enforcement ensuing.
1.28The aviation white paper noted that similar ombuds schemes in the telecommunications, energy and water, financial services and aged care sectors have proved successful at handling large numbers of complaints.
1.29In August 2024, a consultation paper was released and submissions opened to contribute to the policy design of the ombuds scheme. Consideration and drafting of the proposed legislation continues in 2025. In the meantime, an interim ombudsperson has been appointed from within the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (the department) with a limited set of functions. The interim ombudsperson will focus on:
drafting and consulting on the Aviation Customer Rights Charter;
reviewing and producing a report on aviation industry complaints handling; and
establishing systems and processes to respond to customer complaints about the aviation industry, with complaints handling expected to commence in 2025.
1.30The department said that the complaints handling abilities of the interim ombudsperson will be limited initially, with greater scope to make decisions following the passage of legislation to support the independent ombuds scheme.
Aviation Customer Rights Charter
1.31A focus of the new ombuds scheme will be the development of an Aviation Customer Rights Charter. The charter is being developed with the aim of defining the obligations that the aviation industry has to its customers.
1.32The aviation white paper emphasised that the charter should set out what the ombudsperson considers to be fair and reasonable conduct by airlines and airports, and should include:
customers entitlements to refunds for flights that are disrupted, cancelled or unreasonably delayed;
timely and accessible provision of refunds;
the length of flight delays that would be considered unreasonable;
circumstances that are considered reasonable for disruptions, delays and cancellations;
accessible and timely communication with passengers to provide services in line with customer rights; and
providing support to make alternative travel arrangements when flights are disrupted or cancelled.
1.33On 22 December 2024, the Minister announced the release of the draft Aviation Customer Rights Charter. The department called for submissions on the scope and detail of the draft through a consultation process which closed on 28 February 2025. The charter is expected to be finalised later in 2025.
Consideration by other parliamentary committees
1.34When examining a bill, the committee considers any relevant comments made by the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) and the Parliamentary Joint Committee on Human Rights (Human Rights Committee).
Scrutiny Committee consideration
1.35In its Scrutiny Digest 4 of 2024, the Scrutiny Committee raised potential scrutiny concerns relating to the inclusion of significant matters in delegated legislation. The relevant provisions within the legislation are Subclause 4(1) and 5(1) which rely on the minister making rules within 12 months of the commencement of the act for carriers’ obligations and aviation industry code of conduct respectively.
1.36The Scrutiny Committee considers that leaving significant elements of a legislative scheme to delegated legislation may considerably limit the ability of Parliament to exercise appropriate oversight of legislative schemes.
Human Rights Committee consideration
1.37The Human Rights Committee had no comment on the bill. However, the statement of compatibility with human rights contained in the Explanatory Memorandum concluded that the bill is compatible with the 'human rights and freedoms recognised or declared in the international instruments listed in Section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011'.