PNG competition czar wants airline compensation scheme

By Andrew Curran.

Papua New Guinea’s Independent Consumer and Competition Commission (ICCC) has called for greater consumer protection and service transparency across the country’s aviation sector.

The ICCC is also impressed by the tiered financial compensation schemes in the United Kingdom and Canada and says Papua New Guinea could adopt something similar, “tailored to its economy”.

The competition watchdog, which released its final report into Papua New Guinea’s aviation market late last month, says there is no dedicated legislative or regulatory framework guaranteeing air passenger rights. It says that needs to be fixed and recommends the implementation of a formal passenger rights framework, supported by legislation and regulation.

“Frequent complaints… highlight that passengers regularly face unannounced cancellations, long delays, and inconsistent schedules,” the report states.

“The lack of structured airline contingency planning and poor communication with affected travellers exacerbates the disruption. Passengers are rarely informed of their options or entitled to assistance, such as rebooking through other airlines or partial fare reimbursement.”

Papua New Guinea’s two scheduled passenger airlines are Air Niugini and PNG Air. Air Niugini enjoys a domestic market share of approximately 66%, while PNG Air carries the remainder. Combined, the two airlines fly approximately 1.5 million passengers annually around Papua New Guinea

The ICCC report identified four recurring issues relating to consumer protection and service transparency across Papua New Guinea’s aviation sector:

• Poor consumer protection rights;
• Lack of pricing transparency;
• Systemic delays and cancellations, and limited redress; and
• Weak complaints-handling processes.

Neither Air Niugini nor PNG Air responded to a request for comment before publication.

Poor consumer protection rights

Papua New Guinea’s airlines operate under general consumer protection laws and civil aviation safety regulations. However, there are no enforceable standards covering delays, cancellations, overbooking, or service obligations.

As a result, passengers affected by schedule disruptions often have limited recourse, and airlines are not legally required to provide remedies, alternative travel arrangements, or compensation.

To address this gap, the ICCC wants to introduce a formal Passenger Rights Framework. This would establish minimum obligations for airlines, including:

• Alternative travel options through interline or codeshare arrangements;
• Reimbursement or partial compensation in the event of cancellations or delays;
• Access to timely and reliable communication through help desks and digital platforms; and
• Defined standards of customer care, particularly during service disruptions.

Lack of pricing transparency

The ICCC says an ongoing concern among consumers is the lack of clarity around airfare pricing and the absence of standardised information regarding ticket conditions.

This includes opaque charges such as fuel surcharges, airport levies, and service fees, many of which vary without explanation.

The ICCC argues that mandatory disclosure of all price components at the time of booking would improve transparency. It recommends that airlines be required to disclose:

• A full breakdown of fare components;
• Standardised conditions of carriage and refund policies; and
• All ancillary charges and additional fees before purchase.

Airlines should also be required to provide receipts and booking confirmations detailing all costs.

Lack of redress for delays and cancellations

Papua New Guinea’s two airlines each operate their own complaints processes. However, the ICCC maintains these are unregulated, inconsistent, and often inaccessible to passengers.

“Consumers facing unresolved disputes are typically required to raise their grievances through ICCC’s general consumer complaint process or via the Department of Transport, both of which lack a targeted framework for aviation-specific matters,” the report says.

To address this, the ICCC recommends establishing a formal complaints and redress mechanism overseen by an independent economic regulator that would include:

• Mandatory registration of complaints by airlines and acknowledgement within a fixed timeframe;
• A tiered escalation process, including referral to the regulator if unresolved;
• Annual publication of complaints data by airline and type of issue; and
• Regular audits to ensure compliance with complaint-handling standards.

The ICCC adds that the aviation economic regulator should be empowered to mediate disputes, investigate systemic consumer issues, and, when necessary,  issue binding directions.

Weak complaints-handling processes

The ICCC says Papua New Guinea’s aviation sector operates without a dedicated regulatory regime governing consumer complaints, creating significant challenges for airline passengers. It describes this as a “regulatory gap”.

The report calls for a “comprehensive, transparent, and accessible consumer complaint framework that empowers consumers, holds service providers accountable, and aligns PNG’s aviation sector with international best practice”.

“It would be necessary, therefore, for a Complaint Handling Framework to be introduced by the aviation regulatory authority,” the report notes.

“It would be logical for this to be managed by the ICCC, given its consumer protection mandate under the ICCC Act.”

Either way, the ICCC says any framework should be built around certain principles, including transparency, accessibility, timeliness, confidentiality, accountability, escalation pathways, and continuous improvement.

While likely to prove popular with passengers, Air Niugini and PNG Air may be less enthusiastic about additional regulatory requirements that could increase operating costs.

ICCC eyes Canadian and UK frameworks

From the outset, the ICCC says any compensation mechanism must be practical and economically sustainable, considering airline operating realities, cost impacts, service availability, and Papua New Guinea’s operating environment.

Its preferred model mirrors the United Kingdom’s UK261 rules and Canada’s Air Passenger Protection Regulations.

Both frameworks impose explicit obligations on airlines to care for passengers affected by delays and cancellations and mandate minimum standards of treatment, including rebooking requirements, compensation for lost or delayed baggage, and tiered financial compensation for disruptions.

“Under Canada’s Air Passenger Protection Regulations and UK261 rules, if a flight is delayed by two or more hours, the airline is legally required to provide standards of treatment free of charge,” the report notes.

“This includes food and drink in reasonable quantities, access to communications (Wi-Fi or telephone calls), and free hotel accommodation and transport if the delay extends overnight… Papua New Guinea could introduce a basic aviation standard-of-care rule.”

“Under Canadian law, if an airline cancels a flight or causes a delay of three hours or more, it must rebook the passenger on its next available service,” the report notes.

“However, if the passenger cannot be rebooked within 48 hours, large airlines must purchase a ticket on a competing airline to get the passenger to their destination as quickly as possible.

“Adopting this 48-hour rule in Papua New Guinea would vastly improve domestic mobility.”

Compensation for lost and delayed baggage

The report says lost and delayed baggage remains a significant pain point for airline passengers in Papua New Guinea.

Passengers often wait weeks for missing baggage to be located and receive little or no compensation for essential items they must replace in the meantime.

Under frameworks aligned with the Montreal Convention, airlines must reimburse baggage fees and compensate passengers up to a statutory limit for essential purchases and the value of lost luggage.

The ICCC recommends a Papua New Guinea equivalent, including:

• A flat-rate daily allowance for baggage delayed more than 24 hours; and
• Automatic refunds of baggage fees.

The commission argues this would incentivise airlines to improve baggage handling performance.

Cash compensation for delayed flights

Perhaps the most eye-catching recommendation for passengers is the introduction of cash compensation for delays within an airline’s control.

The ICCC proposes a tiered scheme that differentiates between larger operators such as Air Niugini and PNG Air and smaller carriers such as TropicAir, North Coast Aviation, and PNG Mission Aviation Fellowship (MAF).

“This ensures dominant carriers are held financially accountable for poor scheduling, while avoiding bankrupting smaller bush-flying operators that serve remote communities under more challenging conditions,” the report states.

The ICCC says its consumer protection and pricing transparency recommendations align with international best practice observed in countries like the United Kingdom, Australia, and Canada.

The competition watchdog argues that a more proactive and structured approach is required to protect consumers, improve reliability, and ensure equitable access to air transport throughout Papua New Guinea.

“Consumer protection and service transparency are not only matters of fairness but are also central to the sustainability and credibility of PNG’s aviation sector,” the report notes.

“A stronger regulatory framework, empowered institutions, and practical policy mechanisms, including reliability standards, will ensure that the aviation system better serves the needs of all users.”

You can read the full ICCC report here.

Photo: AI Generated.

Contact the writer: andrew@aerosouthpacific.com