Qantas has knocked back calls for a passenger compensation scheme for delayed and cancelled flights, arguing it would force airlines to jack up their fares and threaten the viability of some routes.

Key points:

· A compensation scheme has been floated by the Australian Competition and Consumer Commission

· In a submission to the federal government, Qantas says the scheme would have negative consequences

· Qantas has also labelled Sydney, Canberra and Hobart as "airports behaving badly"

The airline has released its submission to the federal government's aviation green paper, acknowledging its recent performance had been "unacceptable" and left passengers disappointed and frustrated.

But Qantas insisted a compensation scheme would do little to improve the situation, and may make air travel more difficult.

"The Qantas Group considers that the introduction of mandatory compensation would be a backwards step that will do nothing to reduce delays and cancellations, will increase confusion and complaints and materially increase costs, ultimately leading to higher fares and potentially compromising the viability of marginal routes," the airline said in its submission.

A compensation scheme has been floated by the Australian Competition and Consumer Commission (ACCC) and independent MP Monique Ryan, citing a system in place across the European Union.

 

Qantas says flights to locations with low demand could be vulnerable if a compensation scheme is implemented.(ABC News: Rachael Clifford)

Qantas rejected the idea, and argued the European scheme "was never intended to address operational disruption but was introduced to deal with overbooking practices".

"In circumstances where compensation regimes have done nothing to reduce delays and cancellations, or to deliver better outcomes for consumers, the Qantas Group cautions against introducing such a regime in Australia without closely examining, and seeking detailed stakeholder input on the adverse cost, network and service consequences of adopting a model where consumers are compensated for delays and cancellations," it said.

Qantas claimed a compensation arrangement would have an "inflationary impact on fares for what will effectively be mandatory travel insurance for all passengers" and would threaten the viability of low-cost carriers.

It said it would also have a "likely negative effect on marginal routes" particularly across "Australia's uniquely vast and scattered regional network, where recovery options are more limited".

Ms Ryan, who had been calling for a compensation scheme, labelled Qantas' argument as "alarmism".

"It's outrageous that Australians flying back home for Christmas will have their flights cancelled or delayed — and they won't get a cent for it," she told the ABC.

"When the US, EU and Canada implemented these changes, planes flew more and passengers were compensated properly.

"Qantas' time as the mafia of the sky is up. I urge the federal government to put money back in passengers' pockets — now is the time."

The airline reiterated its approach to delaying or cancelling domestic flights was carefully considered, even though it led to passenger irritation.

"When operational problems mean that the Qantas Group can't fly our planned schedule, we lean on recovery flights from high-frequency routes like Melbourne-Sydney or Canberra-Sydney because the impact on customers on these routes is usually limited to an hour or so," the submission said.

"This helps us protect lower-frequency routes to regional centres and places like Darwin or Hobart, where the impact of a cancelled flight for passengers could be half a day or more."

Qantas lists Sydney, Canberra and Hobart as 'airports behaving badly'

Qantas has also used its submission to reveal a list of what it describes as "airports behaving badly", outlining its gripes with the operators of some of the nation's major airports.

"The tactics employed by airports are intended to require the Qantas Group to accept unreasonable terms to protect its operations and customers," the airline argued.

Qantas took aim at Canberra, Sydney and Hobart in particular, arguing their behaviour had a "detrimental impact on consumers".

"In 2021, following the expiration of the agreement with Qantas, Canberra Airport threatened to have Qantas charged with trespass if it continued to use the airport without agreeing to their standard conditions of use," the airline argued.

"These standard conditions of use include provisions such as the ability for Canberra Airport to change pricing at any time and for any reason without consent, and the right to impound or sell aircraft upon non-payment or late payment of debt regardless of the amount."

Qantas argued Hobart Airport had refused to hold "good faith negotiations" over certain fees, and accused Sydney Airport of a "lack of transparency" in increasing fuel charges.

"Airports can and do impose unreasonably and unsustainably high charges on airlines and consumers," the airline said.

"Their profitability is well beyond what would be achievable if airports were constrained by competition or effective regulation.

"Between 2007–2008 and 2018–2019 the profit margins of Sydney, Melbourne and Brisbane airports were consistently between 55 per cent and 65 per cent, while Perth fluctuated between 45 per cent and 80 per cent.

"By comparison, in 2022–2023, when the Qantas Group posted a record profit, the profit margin was 13 per cent."

Sydney Airport's submission is expected to be made public next week.

The Australian Airports Association has previously argued airport charges make up just a small amount of the cost passed on to customers by airlines.