Jetstar is set to cop a hefty fine for misleading some customers about their rights to refunds – and may even be forced to pay back some of its passengers.
In addition, the country’s major airlines will review complaints and offer compensation to some affected customers, following a crackdown by the Australian Competition and Consumer Commission.
“Passengers will now be offered refunds or other remedies by these airlines when there has been a failure to supply the service within a reasonable time,” ACCC chair Rod Sims said on Monday.
The issue centres around claims on the airlines’ websites. Qantas-owned Jetstar has agreed to a $1.95 million penalty, and to pay some of the ACCC’s costs, after admitting that it stated online that some fares were not refundable, and that consumers could get refunds only with more expensive fares.
“No matter how cheap the fares are, airlines cannot make blanket statements to consumers that flights are non-refundable,” Mr Sims said.
The budget carrier has also admitted it suggested consumer guarantees did not apply to its flights.
However, services such as flights have automatic consumer guarantees. That means if a flight is cancelled or significantly delayed for a reason within the airline’s control, passengers might be entitled to a refund.
The consumer watchdog launched Federal Court proceedings against Jetstar. The court is to decide whether to approve a joint submission from the airline and the ACCC about the penalty and costs.
Jetstar has also admitted it suggested consumer guarantees under Australian law did not apply to its flight services.
It’s frustrating for travellers when they have difficulty getting a refund for flights when they are entitled to one.”
Mr Sims said the case was also important because it sent a wider message that business cannot exclude or limit consumer rights under Australian law.
Following the decision, Jetstar and its competitors – Tigerair, Qantas and Virgin Australia – have all agreed in court-enforceable undertakings to review their refund policies, compliance programs, websites and booking systems in response to ACCC concerns that each has made false or misleading representations about consumer rights.
Fairfax Media reported on Monday that Tigerair was pulled up for telling consumers they could get a refund only if they paid a “refund admin fee”. Its parent, Virgin Australia, had denied refunds to holders of some fares, and said customers were eligible only for 12-month credit vouchers.
Qantas agreed that it might have misled consumers into thinking they could not get a refund on certain fairs, and that consumer law guarantees did not apply to its flights.