Drafting of consumer-driven Downgrade Redress policy - please contribute

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timster

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As a result of yet another egregious abuse by an airline of the legal vacuum regarding downgrade regulations, AFF members are beginning the process to draft a consumer-driven policy for consideration by the ACCC and/or other relevant authorities with legal oversight of the airline industry, driven by member's wide experience in this domain. We hope that AFF will continue its advocacy with the ACCC and airlines regarding this, by coordinating the drafting of this policy. This a consumer-driven initiative, not an airline-driven one.

While informed by some policies in other jurisdictions, it would be good if a local policy is based on Guiding Principles acceptable to local airline passengers. Specific policy stipulations should then follow from those Principles. I will kick things off, as it was my suggestion in the above thread that a consumer-driven policy for submission to the ACCC is necessary, supported by AFF. My future contributions are likely to be limited - others are more qualified and better-placed to guide further development of the draft and submission to the relevant authorities.

Definitions
Downgrade Redress involves an airline being unable to provide the booked/paid seating class to a passenger on the booked flight, and hence the airline must provide an acceptable alternative to the passenger.

Guiding Principles
1. Providing the passenger with a seat on the booked flight, in the booked class or above, always remains the pre-eminent concern.
2. Downgrade has the potential for severe burden on the passenger.
3. The policy does not attempt to dictate to airlines the process for how downgrades are initiated. It only concerns dealing with the impact on the passenger.
4. The fault lies with the airline being unable to provide the service booked by the passenger (for any reason). Situations where the passenger may be at fault (in any way) are not the subject of the policy.
5. The airline has caused the inconvenience to the passenger by initiating the downgrade process and must therefore bear the preponderance of the burden of resolution.
6. Simple reasonable options, neither overly-favourable to the airline nor the passenger, are specified both to encourage avoidance of downgrades when better alternatives are available to the airline, but when they are unavoidable, to promote quick agreement and acceptable resolution for both parties in a time-critical situation.
7. The passenger must be afforded documented choice consistent with the policy, so that there is informed consent and compliance on both sides.
8. Downgrade Redress is a formal joint agreement between the airline and the passenger.
9. The passenger must not be pressured to accept unfavourable options.
10. Any agreed compensation must be provided to the passenger automatically and expeditiously by the airline.
11. Suitable mechanisms to deal with non-compliance by the airline must exist.

Please suggest additions or omissions from these Principles.

Specific policy stipulations should ideally then follow from these Principles.
 
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Daver6

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Should this also cover the situation where a downgrade is from say a QF A330 J seat to a 737 J seat? Or is that a separate/different issue?
 

timster

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Here are some suggestions from me on suitable forms of re-dress for downgrade following from the above Principles, to be offered in the following order, at the passenger's discretion to accept or refuse, and documented in a Downgrade Redress Agreement form signed by both parties ...

1. If a seat exists one class above the booked class, this must be offered (at no cost to the passenger). If that class is full, airlines should at least consider a multi-class upgrade.
2. If a seat is not available in the booked class or one class above, all of the following options must be offered, from which the passenger should choose one, at their complete discretion:
(a) full refund of the cost paid plus 50% (or in FFP if used), and the passenger does not fly. This is an absolute minimum stipulation, the 'refund and walk away' option. It recognizes that there are reasons that a downgraded service can be unacceptable to the passenger, and that loss of the booked service is likely to incur additional costs/burden for the passenger.
(b) re-booking on at least an equivalent class of service at a later time/date, with same or equivalent airline, with accommodation provided for delays beyond 4 hours, plus 50% refund of cost paid (or in FFP if used) as added compensation for inconvenience. As this involves the passenger assuming an additional level of inconvenience / delay, 'equivalence' is to be agreed by the passenger, at their discretion.
(c) where an equivalent service acceptable to the passenger cannot be identified as in 2(b), and/or a lesser option (ie downgraded class seat on the booked flight or another flight) is agreed by the pax, additional compensation for inconvenience must be provided:
- the passenger may agree to fly in a downgraded class of service plus compensation of a full (100%) refund of the price paid (or in FFP if used). This both encourages the passenger to accept loss of the class of service booked despite no fault of their own, and discourages the airline from initiating downgrades where better options are available.
(d) any agreed added compensation must be provided to the passenger in agreed form automatically by the airline within 7 days.

As with the Guiding Principles, please suggest additions, modifications, or omissions. Or even agreement. ;)
 

esseeeayeenn

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I am happy to contribute provided we can agree on a smaller group which is qualified to take the principles developed by the forum as a whole and draft them into an effective document.
 

harvyk

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To me, a fair downgrade policy would probably look something like this:

A downgrade should only be used if none of the following options are available:

1. No seats available in any higher class on that aircraft
2. No seats available at the booked class or better on any other service, operated by either the marketing airline or another airline which has similar level of service to the class booked.
3. No alternate service available containing that class of service within time frames suitable for the customer.


In that case the customer should be placed into the highest class available, and refunded the difference between the price they paid, and the lowest price that seat could have been purchased for or an upgrade credit for an upgrade on a future flight of similar length on a space available basis, not award availability.



So for example, if the person paid $3000 for a J seat for that sector, but for whatever reason that seat was not available on check-in, the airline should be forced to do the following.

1. If possible, Op-Up to F
2. See if there is a J seat on an alternate service, either one of their's, a partners or finally even a competitor - provided that competitors PE / J / F was of a similar standard to the marketing carrier (so no moving from QF F to Scoot "J")
3. See if an alternate timed flight is suitable, for example rather than a 12pm flight a 5pm flight might be acceptable.
4. Finally, if none of the other options are available a downgrade would have to happen. However if the PE seat was at once stage available for $1000 for that sector, then the customer should be refunded $2000, or be given an upgrade credit for a future flight of similar length. The upgrade credit should act similar to the AA YUP fares, aka you purchase your next flight and are immediately placed into the higher class.
 

MEL_Traveller

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Here are some suggestions from me on suitable forms of re-dress for downgrade following from the above Principles, to be offered in the following order, at the passenger's discretion to accept or refuse, and documented in a Downgrade Redress Agreement form signed by both parties ...

1. If a seat exists one class above the booked class, this must be offered (at no cost to the passenger). If that class is full, airlines should at least consider a multi-class upgrade.
2. If a seat is not available in the booked class or one class above, all of the following options must be offered, from which the passenger should choose one, at their complete discretion:
(a) full refund of the cost paid plus 50% (or in FFP if used), and the passenger does not fly. This is an absolute minimum stipulation, the 'refund and walk away' option. It recognizes that there are reasons that a downgraded service can be unacceptable to the passenger, and that loss of the booked service is likely to incur additional costs/burden for the passenger.
(b) re-booking on at least an equivalent class of service at a later time/date, with same or equivalent airline, with accommodation provided for delays beyond 4 hours, plus 50% refund of cost paid (or in FFP if used) as added compensation for inconvenience. As this involves the passenger assuming an additional level of inconvenience / delay, 'equivalence' is to be agreed by the passenger, at their discretion.
(c) where an equivalent service acceptable to the passenger cannot be identified as in 2(b), and/or a lesser option (ie downgraded class seat on the booked flight or another flight) is agreed by the pax, additional compensation for inconvenience must be provided:
- the passenger may agree to fly in a downgraded class of service plus compensation of a full (100%) refund of the price paid (or in FFP if used). This both encourages the passenger to accept loss of the class of service booked despite no fault of their own, and discourages the airline from initiating downgrades where better options are available.
(d) any agreed added compensation must be provided to the passenger in agreed form automatically by the airline within 7 days.

As with the Guiding Principles, please suggest additions, modifications, or omissions. Or even agreement. ;)

I think this is the right input (as in considerations), but I think the terminology could be simplified.

If you have a downgrade policy then it must, by definition, involve travelling in a lower class. There does not need to be discussion on whether seats are available in a higher class, or whether the passenger should be charged for being seated in the higher class.

The EU compensation rules will have been drafted to the nth degree. And I can't see why they would not be imported.

An example downgrade compensation could be as simple as:

A passenger downgraded shall be entitled to their choice of:
(a) reaccommodation on another service operated by the carrier, or an alternative carrier, in the original class of service
(b) 75% of the value of the coupon downgraded, or
(c) the difference between the coupon fare paid and the lowest fare paid by any passenger in the cabin the passenger is downgraded to.

Where (a) applies, passengers shall additionally be entitled to delay compensation where their alternative flight arrives more than 2 hours later than the original flight.

Delay compensation will be $300 for 2 hours - 3 hours, $500 for 3 hours - 4 hours, and $1000 for four hours or more. The delay is measured until the opening of the aircraft door on stand.
 

dajop

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In that case the customer should be placed into the highest class available, and refunded the difference between the price they paid, and the lowest price that seat could have been purchased for

The trouble with this approach is that it relies on the transparency of the airline. Is this better than 75% adopted by EU (or let's make it a round 80% ?) Also a separate process is needed for award tickets. For award tickets, I think nothing less than a full refund of the points used is due. Not the difference between a Y award and a J award, say.
 

MEL_Traveller

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The trouble with this approach is that it relies on the transparency of the airline.

True - but IIRC they have this in the States as a method of determining compensation. I dunno how the regulators enforce it over there.
 

timster

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I think this is the right input (as in considerations), but I think the terminology could be simplified.

If you have a downgrade policy then it must, by definition, involve travelling in a lower class. There does not need to be discussion on whether seats are available in a higher class, or whether the passenger should be charged for being seated in the higher class.

The EU compensation rules will have been drafted to the nth degree. And I can't see why they would not be imported.

An example downgrade compensation could be as simple as:

A passenger downgraded shall be entitled to their choice of:
(a) reaccommodation on another service operated by the carrier, or an alternative carrier, in the original class of service
(b) 75% of the value of the coupon downgraded, or
(c) the difference between the coupon fare paid and the lowest fare paid by any passenger in the cabin the passenger is downgraded to.

Where (a) applies, passengers shall additionally be entitled to delay compensation where their alternative flight arrives more than 2 hours later than the original flight.

Delay compensation will be $300 for 2 hours - 3 hours, $500 for 3 hours - 4 hours, and $1000 for four hours or more. The delay is measured until the opening of the aircraft door on stand.

On reflection I agree that the option of upgrading in a 'downgrade' redress policy is contradictory. ;) However I think it needs to be a clearly stated requirement (somewhere) that a downgrade cannot be the outcome if there is a seat available at least one class higher.

And yes my first attempts were wordy, in order to canvas as many considerations as possible. I tried to minimize the possibility for an airline to wiggle out of their responsibility by starting with a detailed policy. But I am sure a policy can be simplified while retaining precision.

I might also say that my suggested % compensations are greater than in other examples, because I have never believed that paying the difference between the paid fare and the cheapest available seat in the downgrade class comes close to reflecting the degree of inconvenience / loss potentially inflicted on the passenger in most cases. The passenger is being forced to deal with a set of circumstances not of their making or choice. Unless you built in some impossible system of judging the 'degree' of hardship imposed, the only option is to err with compensation on the side of the passenger, who made no contribution to the varying degrees of 'balls up' committed by the airline (sometimes deliberately) when a downgrade becomes necessary.
 
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dajop

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I have never believed that paying the difference between the paid fare and the cheapest available seat in the downgrade class comes close to reflecting the degree of inconvenience / loss potentially inflicted on the passenger in most cases

Glad you suggest "in most cases".

It does depend on whether the compensation goes to the passenger or the purchaser of the ticket. If the former, I can certainly envisage circumstances where passengers would be happy to accept a downgrade, if they didn't purchase the ticket. A fair scheme, needs to separate the financial aspect, of something paid for not being delivered (compensation to the purchaser of the ticket) and the emotional aspect (the inconvenience to the specific traveller), and someone who pays for their own ticket gets both components. That would be fairer, but probably vastly more complicated to encode and implement.
 

SeatBackForward

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The trouble with this approach is that it relies on the transparency of the airline. Is this better than 75% adopted by EU (or let's make it a round 80% ?) Also a separate process is needed for award tickets. For award tickets, I think nothing less than a full refund of the points used is due. Not the difference between a Y award and a J award, say.

This is why the airlines will fight this. I suggest we start with asking for 100% refund and let the airlines then explain why this is not feasible, but also explain a remedy better than a full Y fare.
 

Jacques Vert

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Why reinvent the wheel?

Why not start with EU261 and ask for similar/same regulation? Perhaps with some minor changes/improvements where EU261 does not reflect local realities, if any.

That way, airlines have to argue why Australia should be treated differently to an Australian airline departing from the EU. You have a precedent, we should use it. The airlines will argue to have it "downgraded", we can argue to have it strengthened.

JV
 

timster

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It would be good in an ACCC submission to assemble some real illustrative examples to show how airlines currently deal with these situations - with some (anonymous) details of the pax involved included to personalize / humanize the impact of downgrade - and then outline how under a new policy the airlines would instead have to deal with them.
"What did happen ? ...."
"What should happen ...."
Emily's Parents would be a compelling example to include.
Let the airlines try to argue that they dealt with these situations fairly.
 
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MEL_Traveller

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On reflection I agree that the option of upgrading in a 'downgrade' redress policy is contradictory. ;) However I think it needs to be a clearly stated requirement (somewhere) that a downgrade cannot be the outcome if there is a seat available at least one class higher.

True. But the financial penalties should ensure this doesn't happen. If a last-minute passenger is willing to pay $10K LAX-MEL and there's a spare seat in First, they'll likely get upgraded. The airline won't usually let seats go out empty unless there's a valid reason to do so (for example safety).

I think the issue of emotional distress is already covered by the downgrade compensation. The passenger elects to take the downgrade (and get a wad of cash), or they choose a later flight in the cabin originally booked... with a wad of 'delay' compensation to ease their mind :)

If you're booked HND-SYD on QF, but end up flying SQ J instead, arriving 5 hours later... the $1000 should be enough.
 

timster

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If you're booked HND-SYD on QF, but end up flying SQ J instead, arriving 5 hours later... the $1000 should be enough.

Not if you're flying home with a bad back (hence J booked) for a family emergency.

But the airline can't make judgements on the extent of individual hardship incurred. Or apply a low-ball figure. The airline stuffed up. They pay the penalty (for a delayed other flight that's 150% of original fare paid in my suggested scheme). Which needs to be a universally-applied deterrent to these downgrade situations arising in the first place.
 

MEL_Traveller

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Not if you're flying home with a bad back (hence J booked) for a family emergency.

This is where the sympathy from the public and pollies might run out though?

If it truly is a family emergency... (a) you'd likely be paying a higher fare anyway as the emergency won't be planned months in advance - so your chances of getting bumped are probably low, and (b) you'd want to get home asap, so probably any seat will do (if it really is a matter of life and death).

If it's not a matter of life and death, a couple hour's delay with business class on another airline will probably suffice.
 

dajop

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If you're booked HND-SYD on QF, but end up flying SQ J instead, arriving 5 hours later... the $1000 should be enough.

But is the compensation for a delay a different consideration to the compensation for a downgrade?

For someone who is rerouted on another carrier in the same cabin they booked, but arrives 5 hrs later, should there compensation be any different to the compensation of someone who flies with QF in ticketed class, on their original flight but is stuck on the ground because of mechanical issues for 5 hrs?
 

MEL_Traveller

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But is the compensation for a delay a different consideration to the compensation for a downgrade?

For someone who is rerouted on another carrier in the same cabin they booked, but arrives 5 hrs later, should there compensation be any different to the compensation of someone who flies with QF in ticketed class, on their original flight but is stuck on the ground because of mechanical issues for 5 hrs?

This is why the EU combines both under a charter of air passenger rights.

It would be great if we could have both, but I'm not sure of the interest the ACCC would have in respect to delays (other than a potential refund if the goods or services aren't fit for purpose).

Under those rules you can't have both (a refund AND keep the goods). In a delay, the airline isn't usually making a profit (There are circumstances where delays will be for the profit of the airline.)

This particular thread is about downgrades. A clear circumstance where the airline is making a clear profit through either (a) selling the same seat twice, and/or (b) charging the full fare for the seat the passenger is downgraded to. As the profit is fairly indefensible, probably easier to get ACCC involvement.

While I'd love to see delays compensated for, perhaps that's a step the airlines could easily argue against?

in the context of downgrades, if the airline accommodates the passenger on another airline there's still the potential for them to be making a profit from the oversell. The delay compensation discourages that.
 

eastwest101

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Why reinvent the wheel?

Why not start with EU261 and ask for similar/same regulation? Perhaps with some minor changes/improvements where EU261 does not reflect local realities, if any.

That way, airlines have to argue why Australia should be treated differently to an Australian airline departing from the EU. You have a precedent, we should use it. The airlines will argue to have it "downgraded", we can argue to have it strengthened.

JV

Some really good constructive discussions, are there any parts of EU261 that have proven to be insufficient or able to be "gamed" by the airlines? Perhaps that might be worth exploring? Have airlines managed to come up with interesting ways to redefine "delays"? I agree that the closer it stays to EU261 the more difficult it will be for the airlines to argue against.

Its just my opinion but a flat % refund compensation rather than having to retrospectively do a deep dive back into old yield data to find the lowest cost seat in the downgraded cabin class might be more elegant, simple and enforceable? I see no issue with the starting point being 100% refund of fare, how simple and transparent is that? Otherwise I could see some nefarious and inventive schemes by the airlines to hide or delete this info thus minimising their liability?

Agree with others thoughts that the downgrade compensation and the delay penalties should work together to prevent some airlines still profiting from moving pax from one their own expensive seats to "cheaper" partner or competitor's seats.

The other thing worth thinking about is how to counter the airlines argument about equipment changes, delays outside their control and seats going out of service during flights with a quick turnaround. The response would be along the lines of "well thats part of your maintenance requirements."
 

MEL_Traveller

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Some really good constructive discussions, are there any parts of EU261 that have proven to be insufficient or able to be "gamed" by the airlines? Perhaps that might be worth exploring? Have airlines managed to come up with interesting ways to redefine "delays"? I agree that the closer it stays to EU261 the more difficult it will be for the airlines to argue against.

Its just my opinion but a flat % refund compensation rather than having to retrospectively do a deep dive back into old yield data to find the lowest cost seat in the downgraded cabin class might be more elegant, simple and enforceable? I see no issue with the starting point being 100% refund of fare, how simple and transparent is that? Otherwise I could see some nefarious and inventive schemes by the airlines to hide or delete this info thus minimising their liability?

Agree with others thoughts that the downgrade compensation and the delay penalties should work together to prevent some airlines still profiting from moving pax from one their own expensive seats to "cheaper" partner or competitor's seats.

The other thing worth thinking about is how to counter the airlines argument about equipment changes, delays outside their control and seats going out of service during flights with a quick turnaround. The response would be along the lines of "well thats part of your maintenance requirements."

All the things in bold (the last para) are covered by Eu261 (compensation is payable).

The main issue with 261 is airlines just not paying. Not so much the liability - the courts have now determined a pretty clear scope. And the scope is pretty much everything is covered except for weather, ATC, and maintenance that absolutely could not have been foreseen (for example an inherent manufacturing defect). Anything else... bird strikes, urgent safety related maintenance, seats going out of service... it's all part of running an airline (which, very crudely, is sort of what the 'test' is).

I know people scoff at the suggestion, but strictness of EU261 is one of the reasons why airlines like BA will have a spare plane or two sitting at Heathrow simply to cover aircraft that might go out of service.

i disagree the refund should be 100%. We already have that under current consumer protection laws. But then you don't also get to fly. It right that the airline still gets paid *something* if they transport you.
 
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