Partner Sydney
"Would apply to flights to, from and within Australia, including connecting flights, the transport minister must regulate airline obligations in relation to delayed and cancelled flights and to denied boarding and overbooking claims."
The Bill
On 27 February 2024, the Bill was introduced into Australia’s Federal Parliament. If the Bill becomes law, the Federal Transport Minister would be required to introduce regulations to implement the Flight Obligations and the Code of Conduct. Whilst some public and industry consultation would precede such regulations, airlines should not await this stage to act or to engage with the government and other stakeholders, including the Australian Consumer and Competition Commission (“ACCC”).
The key takeaways if the Bill becomes law:
- within 12 months, the transport minister must regulate airline obligations in relation to delayed and cancelled flights and to denied boarding and overbooking claims (“the Flight Obligations”);
- the Flight Obligations would apply to flights to, from and within Australia, including connecting flights;
- the Flight Obligations would also impose minimum levels of compensation for lost or damaged baggage and delayed or cancelled flights; and
- within 12 months, the transport minister must introduce an aviation code of conduct setting out passenger rights and protect passengers and third parties from improper conduct by airlines (“the Code of Conduct”).
Holding pattern: the status quo
Compensation claims by Australian passengers for overbooking and delayed or cancelled flights and for lost or damaged baggage are not currently governed by specific legislation. Airlines have certain obligations to passengers under the Australian Consumer Law (“the ACL”), but this does not impose any specific obligation to provide compensation or assistance. A key issue will be the relationship between the Flight Obligations and statutory rights under the ACL. For example, if the Flight Obligations impose specific deadlines for airlines to act, such as to respond or make payments to affected passengers, will these obligations override, operate in conjunction with or be overridden by the ACL guarantee that services must be provided within a reasonable time frame?
The Flight Obligations
The Bill would introduce a statutory regime for the Flight Obligations and the key Flight Obligations are likely to include:
"The Code of Conduct would seek to regulate the way in which airlines deal with passengers and third parties to ensure that airlines do not act improperly."
- minimum standards of treatment for delayed or cancelled flights and denied boarding, where this is within the airline’s control or is required for safety purposes;
- where the cause of the cancellation, delay or denied boarding is within the airline’s control, the airline must ensure that affected passengers complete their ticketed itinerary;
- minimum standards of treatment for delayed or cancelled flights and denied boarding, where this is outside the carrier’s control, such as natural phenomena and security events;
- minimum assistance levels for disrupted flights;
- airline obligations for delays in excess of three hours;
- minimum compensation levels for lost or damaged baggage;
- requiring airlines to provide refunds and any other compensation in a timely manner;
- ensuring that conditions of carriage and available remedies and rights of recourse are readily available and communicated to passengers in simple, clear and concise language; and
- enabling children under 14 years of age to be seated near a parent, guardian or tutor at no additional cost.
The Code of Conduct
The Code of Conduct would seek to regulate the way in which airlines deal with passengers and third parties to ensure that airlines do not act improperly. It is unclear if and how such improper conduct would be defined in the regulations or be left to courts to determine. This may be a critical issue in the consultation process. Airlines would need to consider whether a statutory definition would be preferable, particularly considering the ways in which courts in the EU have interpreted the ‘extraordinary measures’ defence in EC 261. Another critical issue will be the penalties and other consequences for airlines found to have acted improperly.
The Code of Conduct is expected to include:
- ensuring passengers affected by overbooking, delayed or cancelled flights reach their ticketed destination;
- a standard definition of a ticket and the passenger rights flowing from the purchase of a ticket; and
- passenger remedies and specific rights when an airline has acted improperly.
In the jump seat: enforcement and regulation
"Ensure that airlines are not required to comply with multiple and potentially inconsistent compensation régimes in respect of the same passenger on the same flight."
If the Flight Obligations and the Code of Conduct become law, regardless of their final contents, a key issue will be how they will be enforced. The ACCC vigorously protects consumer rights and frequently investigates and prosecutes Australian and foreign companies for breaches of Australian consumer protection laws. Aviation is a key focus for the ACCC in its 2024/25 enforcement and compliance priorities. If the ACCC is responsible for compliance and enforcement, airlines should be prepared to be investigated for their implementation of and compliance with the Flight Obligations and the Code of Conduct.
Flight paths: where to from here?
Regulation of passenger rights for overbooking and delayed or cancelled flights is neither unique to Australia nor a recent global development. The transport minister and other stakeholders should consider the experience in other jurisdictions where comparable regulation has been introduced to:
- assess whether such regulations will reduce overbooking and delayed or cancelled flights, particularly where delays are caused by the impact of curfews, aircraft movement caps and restricted slot access;
- the role of weather, strikes, conflict, political factors such as airspace closures and epidemics on overbooking and delayed or cancelled flights and the extent to which airlines should be responsible for compensation to affected passengers;
- determine the extent to which airlines could pursue claims against other parties which are fully or partially responsible for the overbooking and delayed or cancelled flights;
- determine the extent to which the costs of such regulation will ultimately be borne by consumers;
- ensure that the compensation régime applies equally and consistently to other forms of transport; and
- ensure that airlines are not required to comply with multiple and potentially inconsistent compensation régimes in respect of the same passenger on the same flight.
