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Qantas, Virgin Australia, Jetstar and Tigerair are fixing their refund policies, following an investigation by the consumer watchdog.
The companies misled customers by limiting refunds, or refusing to offer them, in circumstances where they were entitled to one.
It covers situations where the airline cancelled the flight or failed to provide services in a "reasonable time" — for example due to "significant delays".
Tigerair was investigated by the Australian Competition and Consumer Commission (ACCC) because it charged consumers a "refund admin fee". It only entitled them to credit which was valid for the next six months instead of a cash refund.
Qantas acknowledged it may have misled its customers into thinking they could not get refunds for its cheaper "Red e-deal" fares.
Virgin told consumers refunds would not be offered for "Domestic Gateway" and "International Short-Haul" fares, and they would only receive credit which was valid for 12 months.
"This is an extremely widespread issue," ACCC chairman Rod Sims said.
"For too long, airlines have ignored consumer rights … we really have to fix this going forward."
However, Australian consumer law does not protect consumers who missed their flight or voluntarily cancelled due to a change of mind.
The 'worst offender'
Jetstar was singled out as the "worst offender" because it made "many more" false claims compared to the other airlines, Mr Sims said.
The ACCC took legal action against the low-cost airline in the Federal Court, and the airline has admitted to wrongdoing.
The regulator is seeking orders for a $1.95 million penalty against Jetstar.
"No matter how cheap the fares are, airlines cannot make blanket statements to consumers that flights are non-refundable," Mr Sims said.
"It's frustrating for travellers when they have difficulty getting a refund for flights when they are entitled to one."
Furthermore, Jetstar admitted its website contained misleading statements about fares being non-refundable unless customers bought a more expensive ticket.
Jetstar also misleadingly told customers their consumer rights under Australian consumer law did not apply, according to its terms and conditions.
"This case is important not only for holding Jetstar to account, but sending a wider message that businesses cannot exclude or limit consumers' rights under the Australian consumer law," Mr Sims said.
At the time Jetstar breached consumer laws, the maximum penalties were $1.1 million per offence, which Mr Sims acknowledged was "unquestionably deficient".
But he said under tougher laws introduced in November, companies will now be fined $10 million per breach, or 10 per cent of their annual turnover — whichever is the harsher penalty.
Customer remedies
All four airlines have given court-enforceable undertakings to review their refund policies and comply with consumer laws.
If they commit further breaches, the ACCC can take them to court and impose higher penalties under the new laws.
Qantas and Jetstar have committed to reviewing any complaints it received between April 10, 2017 and March 13, 2018 as a result of flight delays or cancellations — and will compensate customers who were wrongfully denied refunds.
Virgin will review complaints for a slightly wider period, between January 1, 2017 and March 31, 2018.
Tigerair has not provided information on which time periods, if any, it will audit for the purpose of issuing customer refunds.
Many thousands of customers will fall outside those narrow time periods, but that will not prevent them from seeking compensation.
"The undertakings we received are more [like] a proactive offer … based on the airlines' [available] records," Mr Sims said.
"If you've got the records, by all means you can approach the airlines and assert your rights."
Topics: business-economics-and-finance, company-news, consumer-protection, regulation, australia
First posted