Qantas, Virgin, Jetstar and Tigerair are the subject of a complaint by consumer advocacy group Choice, which alleges the four airlines have breached Australian Consumer Law.
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Choice has called for the Australian Competition and Consumer Commission to respond to evidence of excessive cancellation fees of up to $550 per ticket, widespread use of "no refund" signs, and a lack of compensation for the airlines' mistakes.
"Our investigation reveals the significant power imbalance between consumers and airlines, who are not being held to the same basic standards as other industries," said Choice spokesman Matt Levey.
In the past year, 31 per cent of travellers had a problem with flights, 73 per cent of which had problems relating to delays and cancellations, the Choice investigation found.
Other issues included difficulties making changes to bookings, claiming a refund and excessive cancellation or change fees.
Choice alleges one consumer, Daniel Kruk, was charged $861.72 when he decided to cancel two Qantas tickets to New York, following three separate notifications of changes to his flight time that were instigated by the airline.
"...The basis of my cancellation was because Qantas had altered my flight three times and offered me the option to accept or decline," he told Choice.
The ACCC advises that cancellation fees reflect the costs to the business, with fair deposits generally 10 per cent of the total cost.
The complaint report, Fare Play? Terms and conditions in Australia's Airline Industry, identified some of the most problematic terms in the Conditions of Carriage and Fare Rules, a contract which outlines a passenger's refund rights and the airline's legal obligations.
However Choice argued that each of the four major domestic airlines failed to provide a customer with the necessary time required to adequately read the terms and conditions.
For example Qantas' booking page times out after 10 minutes of inactivity, despite the average reading time needed for the 13,000 word contract being more than 50 minutes. In the case of Virgin, the contract takes around 43 minutes to read, despite the booking page timing out in 20 minutes.
According to the ACCC, terms and conditions for online bookings must be "easily available and identifiable."
A Qantas spokesperson said Choice's report was "selective about facts and mischaracterised the law around refunds."
"...Our Terms and Conditions are fully compliant with Australian Consumer Law and they are clearly disclosed on our website....we do offer refunds under certain circumstances."
Choice is calling for the regulator to conduct a review of the "systemic consumer protection issues within Australia's airline industry," with a view to assessing the "true costs of and reasons for delays and cancellations, the effectiveness of complaints handling processes and the appropriateness of remedies provided following airline failures."
A Jetstar spokesperson said the report showed a complete misunderstanding of Australia's consumer laws and how airlines work.
"While a supermarket or retailer can refund an item and then easily sell it again, airlines can never re-sell a seat after a flight has departed...That's why our cheapest fares are non-refundable or customers can pay extra to have more flexibility."
In a statement, Tigerair said its conditions of carriage were always available online, adding that customers had a 24-hour cooling off period after booking, to request changes free of charge.
Virgin Australia said it always complied with Australian Consumer Law, and encouraged customers to familiarise themselves with the inclusions and exclusions of the fare type they are purchasing.
ACCC Chairman Rod Sims said the consumer watchdog would review the report for potential breaches of consumer guarantees or unfair contract terms.
"Previous ACCC investigations into the industry have focused on specific issues such as drip pricing, where a headline price is advertised at the beginning of an online purchasing process and additional fees and charges, which may be unavoidable, are then incrementally disclosed," he said.
"Last week Virgin Australia, Jetstar and Tigerair Australia agreed to cease their practice of preselection [the automatic 'ticking' of add-ons] on domestic online booking platforms, following engagement with the ACCC."
