6 hours ago
The Coalition and consumer groups have accused Qantas of cherrypicking data to invert the conclusion of a study when the airline argued against laws to compensate delayed passengers.
On Monday, Qantas domestic CEO Markus Svensson appeared before a Senate committee hearing into the Coalition’s proposed “pay-on-delay” bill, which seeks to adopt an Australian version of the scheme in place in the European Union.
Qantas and Virgin Australia have long been opposed to it, and repeated their concerns at Monday’s hearing that it would not help reduce delays and cancellations and would instead inflate operating costs, which airlines would ultimately bake into higher air fares.
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Svensson repeatedly referred to a 2020 EU-commissioned review into the efficacy of its compensation scheme, which he told the committee “showed that clearly the scheme led to the cost being passed to the consumer, which is not a good outcome”.
He told the Senate that he had experienced the scheme as a consumer when living in Europe for three years, and said “I have nothing good to say about it”.
“I think a mandatory scheme or compensation scheme does not improve customer protection.”
“I also know from all the studies that the EU’s done that it increases the cost. It hasn’t improved in terms of cancellations and delays,” Svensson said.
However, the 2020 review he referred to, which examined the effects the EU’s scheme between 2011 and 2018, concluded the laws had resulted in a reduction of airline cancellations and delays within their control.
The review found 79.9% of all two hour or longer delays in 2011 were attributable to airlines – meaning it has to provide compensation to passengers. But by 2018, this figure had dropped more than 10%, to 69.7%.
The drop coincided with a surge in overall air traffic within the EU, with the gross number of delays caused by all factors – including weather and air traffic control as well as airline operational decisions – increasing from 60.8m in 2011 to 109.4m.
Under the EU 261 compensation scheme, a passenger is only eligible for compensation if their delay or cancellation was the airline’s responsibility.
Passengers whose flights depart or arrive within the EU and arrive at their final destination delayed more than three hours are entitled to between €250 (A$430) and €600 (A$1,030), depending on the distance of the trip, in addition to refunds and compensation for costs incurred due to the disruption, such as missed connections.
Refreshments and communications entitlements kick in after two hours of delays.
In response to questions about Svensson’s claims about the 2020 review, a Qantas spokesperson pointed to the gross increase in airline-attributable delays between 2011 and 2018.
However, this was the same table in the report which showed how (in proportional terms to account for the rise in overall air traffic) the percentage of airline-attributable delays had in fact decreased by more than 10% over the period.
Coalition transport spokeswoman Bridget McKenzie, who is bringing the pay-on-delay bill, said “travellers deserve a recourse mechanism that does not require them to hire a lawyer to be compensated for egregious behaviour”.
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“For Qantas to appear before a Senate inquiry and cherrypick a 2020 EU study to justify their opposition to minimum passenger protections doesn’t respect the Australian people,” McKenzie told Guardian Australia.
The 2020 EU review also found that by 2018, the scheme was costing airlines on average €138 per passenger affected by disruption, but spread across all of an airline’s customers, this amounted to €4.40 per passenger. It found airlines try to pass this cost on to customers on non-competitive routes, but absorbed it on tightly contested ones.
Adam Glezer, who runs the Consumer Champion, also appeared before Monday’s hearing, where he cited research that found likely cost increases of about A$2 would be baked into each ticket.
While he is opposed to airlines passing compensation costs on to customers, he said this would be “a small price to pay for having a high level of protection in place”.
Glezer was scathing of how Svensson referred to the 2020 review. “Talking in raw numbers about flight disruptions, as opposed to proportionally or as a percentage, is completely misleading. In isolation, it can make a compensation scheme appear ineffective,” he told Guardian Australia.
Glezer said Qantas would be well aware of how the scheme affects operational decisions because it already has to comply with it on its European services.
“EU 261 has been invaluable … It has increased consumer confidence, held airlines accountable for delays and cancellations within their control while also providing fair compensation for the inconvenience caused to airline passengers,” Glezer said.
McKenzie first proposed the pay on delay bill last year, and is progressing it separately to the Albanese government’s aviation white paper process which has resulted in an airline customer rights charter and industry ombuds scheme.
The draft charter did not include a compensation scheme, with Labor seemingly bowing to pressure from airlines who had advocated against such a scheme.
Bea Sherwood, Choice’s senior campaigns and policy adviser, said she remained supportive of an EU-style compensation scheme.
“Airlines have benefited from cancelling flights in the past at the expense of consumers – in one case knowingly selling flights they’d already decided to cancel,” she said, referring to Qantas’ costly legal saga with the consumer watchdog.
She said mandated compensation would deter airlines from behaviours such as consolidating poorly selling flights.
Victoria Roy, spokesperson for the Australian Lawyers Alliance who also gave evidence to Monday’s hearing, said: “EU 261 is just one example of highly consumer-protective measures in EU law. It is a stark contrast to the vague and limited rights in Australia under the Australian consumer law.”
“A straightforward compensation scheme in Australia would incentivise airlines to run on time and help hold them to account for delays that are within their control,” Roy said.
