Qantas domestic CEO Markus Svensson said compulsory payment schemes increase costs and don’t lead to fewer cancellations or delays.

The regulation gives airline passengers the right to claim compensation for flight delays and cancellations, except for in for extraordinary circumstances.

Would a compensation scheme improve reliability?

Qantas was considered the most reliable of Australia’s major carriers last year.

Tonkin said that on average, carriers under the EU261 regulations arrived on time 5 per cent more often than in Australia, with on-time arrivals averaging around 81 per cent.

“The compensation scheme in Europe has incentivised airlines to more reliably arrive on time than they had previously.”

Would airlines pass on the cost to flyers?

But Tonkin said the increase could be higher in Australia due to our aviation duopoly.

Source: SBS News

“In Australia, we’ve got basically two airlines flying about 95 per cent of the travelling public on scheduled services, Qantas, Jetstar, and then Virgin. And so they’re not as sensitive to passenger loyalty as say Europeans,” he said.

“They have a bit more pricing power than in Europe. The details that I’ve seen being reported was that there was a small jump in the airfares of a dollar or two because of the scheme. There’s potential for that price to be a bit higher in Australia just because of the lack of competition.”

‘Consistent across the board’

“It would be unreasonable to ask airlines to pay compensation if the delay or cancellation is outside of their control. Examples would include an extreme weather event, a terror attack or a pandemic.

“There are a lot of situations where consumers have purchased tickets well in advance to obtain the best price. If the flight is cancelled and they have to reach their destination, they must rebook either on the same airline or an alternate one. It will generally result in them paying significantly more. Who is covering that cost?”