Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that:

(a) the conduct of Australian airlines has recently come under fire for a variety of practices, such as sometimes only offering Frequent Flyer and discount tickets one way, meaning customers are stuck with expensive tickets the other way, increasingly frequent flight delays and cancellations, and the linkage of passenger personal profiles to the fares offered to them;

(b) seeking refunds and other assistance for cancelled flights often leaves consumers feeling underwhelmed, with many offered little to no compensation for flight disruptions;

(c) the Australian Competition and Consumer Commission (ACCC) is concerned about the high level of complaints about airlines as well as their low reliability of services; and

(d) Australian airline staff are among the best in the world, yet bear the brunt of increasingly frustrated customers because of improper decisions by management within airline companies; and

(2) calls on the Government to:

(a) accept the ACCC's recommendations made in its submission to the Australian Government's Aviation Green Paper;

(b) establish an independent airline ombudsman with the power to make binding decisions, to allow for fair and efficient resolution of customer complaints; and

(c) establish a targeted and fit-for-purpose compensation scheme for delayed and cancelled flights.

It's obviously no secret that Australian airlines have regularly been in the headlines lately for all the wrong reasons, like unfair pricing practices, poor communication with customers, advertising fares for cancelled flights and frustrating flight delays. Indeed, in its recent report on domestic airline competition in Australia, the ACCC reported that 'service reliability remains a significant concern'. It's no wonder, when just in December last year, the industry cancelled more than 2,200 flights, or five per cent, which is more than double the industry long-term average. Passengers are also struggling with flight delays, with on-time performance rates declining. Indeed, just 63.6 per cent of flights arrived on time in December. What's even more frustrating is that these poor results are often the consequence of problems within the control of the airline, with the ACCC pointing the finger at the airlines management of:

… systemic issues associated with the COVID-19 pandemic, pilot shortages, pilot training bottlenecks and some supply chain disruptions.

To be clear, my criticism is not directed at frontline airline staff. Indeed, most staff are among the best in the world, as I experienced just last week on my short trip to London, to Julian Assange. No, my criticism is directed squarely at airline management and the terrible decisions they've been making to maximising profit at the expense of all else.

Plenty of constituents have contacted my office about all this, sharing stories of delayed or cancelled flights and the financial burden that comes with that, as well as evidence of unfair pricing practices and poor communication from airlines. For example, one constituent told me about a flight that he and his wife booked to Perth with Virgin, late last year. The boarding time came and went. It was not until one hour after the scheduled departure that they were advised the flight was cancelled. While they were booked on another flight the following evening, there was no compensation for their $120 taxi fare to and from the airport nor for the very significant inconvenience. Another constituent was out of pocket by about $700 when Jetstar cancelled her flight at the last minute. She lost more than $500 just on the rental car and airport parking. She was told by Jetstar, in no uncertain terms, that the airline won't compensate these pre-booked expenses.

The airlines should not be able to get away with this, but they do. It's mostly the airlines who get to decide what happens when a passenger has missed a holiday, an important work meeting, a wedding or even a funeral. All too often, customers are left in terrible despair and very significantly out of pocket. Yes, while it is the case that Australians have some rights under Australian consumer law, those rights are far from clear when it comes to flight delays and cancellations. Moreover, the lack of effective mechanisms for consumers to resolve disputes and enforce their consumer guarantees leaves consumers having to resort to raising problems with regulators or pursuing claims in tribunals or small claims courts, which is time consuming, sometimes costly and often beyond people. No wonder contacts to the ACCC about airline issues have remained persistently high and above the pre-pandemic level. Indeed, for the first nine months of 2023, contacts to the ACCC about airlines were 179 per cent higher than in 2018 and 100 per cent higher than in 2019. No wonder, given Australia's lack of regulation, enforcement and complaint-handling mechanisms.

Indeed, Australia lags behind other countries when it comes to securing compensation from airlines. For example, in the UK, all airlines are required by law to ensure passengers arrive at their destination, to provide compensation if flights arrive more than three hours late for reasons within the airline's control and to support passengers who are delayed by providing meal vouchers, phone calls, accommodation and transport. Clearly, the Australian government must implement similar protections here.

While it's obviously a positive that Qantas is promising service improvements, the airlines simply cannot be left to regulate themselves. No, we need strong consumer protections, and the government must heed the calls of the ACCC, which in its domestic airline competition report called for an independent ombudsman scheme to handle consumer complaints and a targeted and fit-for-purpose compensation scheme for delayed and cancelled flights. Only then will Australians have confidence that they will not be unreasonably out of pocket for flight disruptions, and, if they are, that there will be appropriate mechanisms in place to help navigate the system.

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Monique Ryan (Kooyong, Independent) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

The member for Clark raises an important issue. Australian airlines were once regarded as amongst the best in the world for service, safety and reliability. They were the airlines of choice for most Australians. Yet today all of that has changed. Confidence in the Australian airlines has been lost. We debate this motion at a time when the Virgin CEO has recently announced her retirement and the Qantas chair is on his way out, and long-time Qantas CEO Alan Joyce ended his term last year, when he had reportedly been earning $21.4 million.

It's all happened at a time that Qantas also lost $2.5 billion dollars in value, according to some reports; 1,700 workers were found to have been illegally sacked; several other Qantas executives have been overpaid; flights have been regularly cancelled or delayed; luggage has been misdirected or lost; services including aircraft maintenance have been outsourced or offshored; customers seeking refunds have been made to jump through hoops; and price gouging has become a regular feature of Qantas, adding to cost-of-living pressures, as we all know.

My office was regularly contacted by people who were unfairly dealt with by the two major airlines—in particular, when trying to seek refunds. Yet I understand that only in the first half of this year Qantas's profit was $1.25 billion.

We can all understand the disruption that would have occurred during the COVID years. I think that was to be expected, and every industry was disrupted. However, the downward slide of our two major airlines began many years ago.

The reality is, however, that today air travel is no longer a luxury for most people; it's a necessity of everyday life for so many. For them, the economic losses and the cost when flights are cancelled or delayed are considerable. The reality is also that airline flights are no longer cheap. Many people have to think carefully about whether they go interstate by taking an airline flight, because of the cost. I spoke to a businessperson not long ago who made that very point—that he had to choose whether he went interstate for an important event or whether he stayed home because of the cost of the flight.

The fact is that, as the member for Clark quite rightly points out, airlines must be held accountable when they don't deliver the services that customers have paid for, in the same way that retailers are accountable under consumer laws for the products that they sell. The ACCC must be given the power it needs to hold airlines to account. I do note that the motion expressly refers to the creation of an independent airline ombudsman with appropriate powers. Whether it's an ombudsman or it's the ACCC, the reality is that we need to find a mechanism by which the airlines are held to account for the services they promise and then do not deliver.

As the member for Clark also alluded, my comments in no way reflect on the Qantas and Virgin workforces. As members of parliament, we all fly often and we see the pressures those staff are under each and every day. They in turn, I think, have to deal with incredibly difficult circumstances and do the best they can under very difficult conditions. They often deal with very frustrated and angry customers. Again, I can understand why the customers are angry, but the staff, through no fault of their own, are trying to accommodate them in the best way they can, and I commend them for the effort they often go to.

The reality is that also, through COVID, many of them left the industry and did not come back afterwards, because they knew they would be coming back to an industry that was incredibly stressful. I sometimes wonder about how many of them need to take time off work because of the stress associated with it. I understand the government has got an aviation white paper process underway. That process is important. It's important, firstly, as I said earlier, in keeping the airlines to account but, more importantly, to restore public confidence in the Australian airlines—the way it used to be. I look forward to the outcome of that process.

Monique Ryan (Kooyong, Independent) Share this | Link to this | Hansard source

Recently I upset a few people by referring to the aviation industry in Australia as the mafia of the skies. I do have to apologise for any upset caused to the mafia, who, after all, operate according to a strict code of conduct called the omerta, which is enforced and respected—in contrast to our airlines. Australia's special circumstance as a large, sparsely populated continent makes our aviation sector critical to our ability to connect people; to support our businesses and our health, education and tourism sectors; and to secure our supply chains. The current effective duopoly held by Australia's two largest airlines in both the domestic and international markets has created a situation in which our national and personal interests are vulnerable to their aggressively commercial practices and profit oriented decisions.

In recent years we've been subjected to a shutdown by Qantas in an industrial dispute which left passengers stranded, to the withholding of thousands of refunds through design and poor service responses, and to the hollowing out of skilled, experienced and much-loved workforces, which has resulted in delayed flights and poor service. More recently we've experienced the sale of tickets for cancelled flights and the hoarding of airport slots with phantom flights, in order to prevent further competition. Disabled travellers have described being forced to crawl to their seats, being refused disembarkation at their destination and being left with broken wheelchairs. Loyalty programs have been devalued. Points can't be redeemed, or they can be used to travel only in one direction. And they're now so devalued that the points which would have got you a first-class return ticket to London in 1996 will now buy you a coffee machine.

Currently, Australian consumer law does not require airlines to guarantee the timeliness of their services or even that they will run. Consumers are required to seek compensation for losses through airlines' complaint mechanisms. Less than half of Australians who seek a refund for a cancelled flight receive it within a month; one-fifth wait more than six months. Other nations, like the UK, US, Canada and the EU, have a clear set of customer protections which specify appropriate means of communication, assistance and compensation when passengers are disadvantaged by circumstances that are within the airlines' responsibility and control.

In Europe, passengers whose flights arrive at their final destination with a delay of more than three hours receive a reimbursement of between 250 and 600 euros, depending on the length of the trip. Longer delays mean that passengers can opt for a full refund to be paid within seven days. The compensation rules do not apply in situations where extraordinary circumstances, such as poor weather, cause the delay. This form of regulation results in more on-time arrivals and reduced delays. Its effect has been shown to be greatest on routes with little competition and those for legacy carriers. This shows that regulated consumer rights can improve service quality when incentives for competition are weak. This model would also provide an active disincentive for slot hoarding.

Peak bodies and the Australian Competition and Consumer Commission all support the need for airline-specific consumer protection. This should include the establishment of an independent travel and tourism industry ombudsman scheme. It should include standards of communication requirements for airlines to inform passengers in a timely fashion about delays and cancellations. That should occur both before departure but also while the passengers are on board. It should mandate proper heating and cooling of aircraft stuck on the tarmac and should enforce standards of care for disabled passengers. It must require airlines to pay compensation for passengers if they have delayed or cancelled flights, with clear rules and time frames around those refunds. It should include minimum requirements for travel credits. These rules would essentially create a passenger bill of rights in Australia. Australians deserve better from our airlines. It's past time that they stopped taking us for the very worst kind of ride.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I want to commend the member for Clark for bringing on this debate on airline performance and what could be done. It is a good use of the parliament's debating time because the substandard performance of airlines across the country is definitely a hot-button issue. People are rightly angry. The last two years have been truly dreadful. It's not good enough that service standards are so low. The rate of cancelled and late flights is not good enough. It's not good enough that people can't get refunds and are mucked around. What's certainly not good enough is airlines' record of access for people with disability.

There are some signs of recent improvement. That's welcome. On-time performance has slowly improved since even December to January. It jumped from about 63½ per cent to 73½ per cent. That's material. But it's still below the long-term average of about 81 per cent. Prices have come down from their peak. Again, that's welcome. But it's still not good enough.

To be fair to the airlines, in the post-COVID recovery period things were difficult. It was difficult to get the workforce back in. People still had rolling waves of illness and people would call in sick. It was difficult to get all aircraft back into service. But those times are gone. We are well past that. The issue, when you strip it back, is not COVID. It's that the Australian aviation sector has been allowed to drift for way too long. The previous government did nothing substantive for a decade. They did nothing on the slot system at Sydney airport that they now screech about. They did nothing whatsoever on consumer protections. They did absolutely nothing to stand up to Qantas when they illegally sacked thousands of their own staff. They had no blueprint for this critical industry sector's future. The Australian aviation industry has been allowed to drift for far too long, so the government is acting through the aviation white paper.

I want to make a couple of comments. These are personal comments. They're not government policy on what, to be fair, are the very seductive calls for a consumer compensation scheme. I strongly agree we need more consumer protections. That is a focus of the white paper. I am personally a little sceptical, though, about introducing a European-style full compensation scheme here for a couple of reasons. They are things we should think about as we debate this over the next few months. I am concerned that actually what it would mean is that everyone would pay more because the cost of the scheme, like with insurance schemes, inevitably would get factored into the airlines' cost of doing business. That's something we need to think about because it's a commercial reality. Some people who experience unacceptable cancellations or delays would get compensated, but everyone else would pay more for their ticket to fund that scheme. We have to be upfront about that and think, 'Is that what we want?'

The other thing that worries me in the Australian context is that we have an enviable record of airline safety and we need to be really, really cautious before we introduce something that provides perverse disincentive on safety. You do not want airlines cutting corners, thinking, 'We are at two hours and 50 minutes; let's get the aeroplane ready to fly because we don't want to tip over the three hours,' or whatever number is the threshold for compensation. I'm not having a go. It's a good point to debate. But I am personally very sceptical that a full compensation scheme would actually be a good thing in Australia. I think stronger consumer protections and certainly rights to refunds are better.

The green paper and white paper process is happening. We have had more than 450 submissions. They are being looked at at the moment. The papers will be released later this year to guide the sector to 2050 and set the foundations for reform. We want to see through that a more competitive sector. Competition's critical to put downward pressure on prices and to give consumers more choice from destination to destination. We absolutely want to see stronger protections for consumers, which is something that the former government did absolutely nothing about in their wasted decade of division and decay and dysfunction.

We want to keep Australia's world-leading safety record. I believe we should want to see more secure jobs so that people who are, in effect, working permanently full time in the aviation industry can have a full-time job, get a home loan and be treated like other Australians, not be subject to casual, insecure, ever-degrading working conditions.

We want to see a pathway to net zero from the aviation sector. I applaud what the minister and government are doing on bringing the ACCC's monitoring powers into play here. They'll identify any inappropriate market conduct, but, importantly, they'll also directly inform the policy process. So what the ACCC is looking at and finding at the moment will come back into the policy process through the aviation white paper, which is to be released later this year.

I commend, again, the member for Clark for actually bringing a sensible debate. They weren't very good at government, and they're also not very good in opposition if you look at the Notice Paper and what's up for the rest of the day. So well done, you.

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

There being no further speakers, the debate is adjourned and the resumption of the debate will be made in order of the day at the next sitting.