Airline ombudsman plan gives hope to passengers but Qantas-Virgin duopoly remains unchallenged

If there’s one collective trauma that unifies Australians, it’s the experience of dealing with our airlines. Complaining about ludicrous air fares, dodgy customer service and mind-numbing delays has become a national pastime.
The promise of an ombudsman and air passenger charter of rights could finally give the travelling public greater leverage in the one-sided dynamic between the country’s airline duopoly and a spread-out population heavily reliant on air travel.
But the Albanese government’s much anticipated white paper defers several key actions to later times or to other decision makers, and has arguably arrived far too late to improve competition.
It certainly can’t salvage the since-squashed benefits from Bonza and Rex’s David-esque rivalry with Qantas and Virgin’s Goliath duopoly, with the latter pair commanding more than 90% of the market.
Asked on Monday whether she thinks the duopoly should be broken up, the transport minister, Catherine King, responded that Australia was a small market, and “if you look at comparable countries, to have two airlines … it is unusual”.
Even if the long-term plan for Australian aviation as outlined in the white paper is realised, local travellers will still be well behind global standards.
The ombudsman scheme will replace the existing Airline Customer Advocate, a body funded and run by airlines which critics have labelled as toothless and capable of little more than forwarding grievances to airlines. It has been unable to force refunds – or any action.
Instead of customers having to badger airlines for refunds after disrupted bookings or deal with expiring travel vouchers (which will be outlawed), the onus will now be on airlines to issue refunds or solutions within a legislated timeframe. They’ll face penalties if they fail to do so.
But the detail of the rights charter remains a mystery.
King could have heeded the overwhelming calls from consumer advocates and committed to a European Union-style cash compensation scheme, where passengers are entitled to up to €600 (A$1,165), once their delays reach a certain hour threshold or are cancelled.
Instead, the government has left the door open for the interim ombudsman to determine if such a scheme should form part of the rights charter.
King explained her reluctance to commit to a compensation scheme, flagging a concern that airlines could “risk factor in” the expected cost of remedies they would have to pay out, and increase air fares to cover the predicted costs.
Qantas had been one of few voices opposed to such a scheme, and King’s unwillingness to commit to forced compensation will do little to appease concerns that the national carrier has too much influence in Canberra.
A compensation scheme would have also been one way of cracking down on delays and cancellations within an airline’s control, and the misuse of slots – the term for the right to take off or land at an airport at a given time.
For years, Qantas, its budget carrier Jetstar, and Virgin have denied allegations they are “slot hoarding” – the act of deliberately scheduling more flights than they intend to operate out of Sydney, before strategically cancelling them so as to not cancel any service more than 20% of the time.
This allows an airline to retain its slot but it can prevent a new entrant airline from launching a rival service at peak times on the lucrative “golden triangle” routes between Sydney, Melbourne and Brisbane.
Bonza and Rex complained they weren’t able to get access to slots at the most profitable times at Sydney, and this month the former competition tsar Rod Sims said aviation laws favoured the incumbent duopoly while dooming smaller rivals.
Despite competition and access to Sydney airport being the most pressing issue facing aviation, King on Monday rehashed the government’s February response to recommendations from the 2021 Harris review – a response Sims has called inadequate.
To seriously liberate access to Sydney airport in the years before Western Sydney airport opens, experts have argued that the global standard – which allows a slot to be cancelled 20% of the time – is too lenient for the harbour city, where noise concerns limit overall movements and justify a curfew.
The government’s white paper could have committed to a stricter 95:5 rule for Sydney – long-term cancellation averages at the airport are 2% to 3%, but those accusing Qantas of slot hoarding point to its at-times 10% cancellation rate on the Sydney-Melbourne route.
Instead, the government has deferred consideration of tightening slot rules to the Productivity Commission – another decision maker to hide behind, if it ever leads to change.
As the opposition claimed on Monday, without boosting competition or financially punishing major airlines for cancellations within their control, little improvement in customer experience should be expected.