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ACCC orders AirAsia X to compensate for flight cancellations

April 27, 2015 Headline News, Travel Law No Comments Email Email

In Australia, airlines are self-regulating when it comes to compensating passengers for flight cancellations. There are no rules airlines need to follow except that they should not act falsely or misleadingly when cancelling flights (i.e. not breach the Australian Consumer Law). Each airline has their own cancellation policies.

The Australian regulatory authority which covers the airline industry – passenger interface, the Australian Competition & Consumer Commission (the ACCC), takes a ‘light handed’ approach when it comes to air passenger rights. It does not lay down any rules.

And so it is a welcome sign that the ACCC has issued a media release on what AirAsia X must do for air passengers affected by two instances of flight cancellations.

The ACCC Media Release – AirAsia X commits to process for customers affected by cancelled Kuala Lumpur and Denpasar flights 21 April 2015

What did the ACCC investigate?

The ACCC investigated two instances of flight cancellations:

  • Melbourne – Denpasar flights which were due to start from 26 December 2014 were cancelled because the Air Operator’s Certificate had not been issued by CASA – AirAsia X had opened the flight bookings without the Certificate, and received it only in March 2015.
  • Adelaide – Kuala Lumpur flights from 25 & 26 January 2015 onwards were cancelled because the route was discontinued – AirAsia X had accepted flight bookings beyond these dates.

How did AirAsia X handle the flight cancellations?

In the first instance, AirAsia X gave passengers who had booked flights the option of being re-routed via Kuala Lumpur.

In the second instance, AirAsia X required passengers to either cancel their flights and re-book on other airlines or to make their own way to Melbourne or Perth to catch a flight.

In both instances, passengers experienced disrupted travel arrangements and incurred additional out-of-pocket expenses.

What approach did the ACCC require AirAsia X to take?

“Consumers are entitled to compensation for any reasonably foreseeable loss due to the failure of a business to deliver a contracted service, and these claims should be dealt with promptly,” ACCC Chairman Rod Sims said.

“It is very important that any business has in place systems and processes to properly handle and consider customer refunds and that they can adjust quickly when things go wrong and there is an increase in the number of claims,” Mr Sims said.

Following discussions with the ACCC, AirAsia X has published a notice on its website advising that for consumers affected by the cancellation of its Melbourne/Denpasar and Adelaide/Kuala Lumpur services:

  • all outstanding requests for alternative flights, credits and refunds have now been processed;
  • AirAsia X is committed to process any future requests for alternative flights, credits and refunds within 14 days;
  • AirAsia X will expeditiously process valid claims for reasonable out of pocket expenses for affected passengers in a fair and reasonable manner;
  • customers can re-lodge claims previously made to AirAsia X for re-assessment; and
  • a report on the handling of claims for out of pocket expenses will be provided to the ACCC.


Essentially, the ACCC set a time frame that passenger requests for alternative flights, credits and refunds be processed within 14 days and a requirement that claims for reasonable out of pocket expenses be processed fairly and reasonably.

The ACCC did not order that AirAsia X make a lump sum payment for loss of flight arrangements, even though the flight cancellations were AirAsia X’s fault. In Europe, a lump sum payment of a minimum of €250 would have been made.

Is it too much to expect that this example of a poor airline cancellation policy will prompt the ACCC into laying down some rules for air passenger compensation for flight cancellations?

Anthony J Cordato, Travel Lawyer

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