Qantas, Virgin Australia, Jetstar and Tigerair are reviewing their refund policies, following an investigation by the consumer watchdog.
They misled customers by limiting refunds — or refusing to offer them — in situations where there were either significant delays, or the airlines cancelled the flight.
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.
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, ACCC chairman Rod 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.
Qantas and Jetstar will review customer complaints made 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 any information on which time periods, if any, it will audit for the purpose of issuing customer refunds.