The Albanese government has bowed to pressure from Qantas and other airlines to not pay cash compensation to passengers whose flights are delayed or cancelled.

The omission of a compensation scheme in the government’s draft aviation customer rights charter follows claims from airlines such as Qantas that compensation rules – which exist in the European Union – would force them to preempt costs and increase air fares. The charter was released on Sunday.

When the government announced it would introduce an airline passenger charter of rights – to fall under a forthcoming industry ombuds scheme – it left open the door for the interim ombudsperson, Pauline Sullivan, to determine if a compensation scheme should be in the charter she was tasked with drafting.

However, such a scheme is not included in the draft charter, which is now open for public consultation until the end of February.

The omission means advocacy groups’ longtime hopes for an EU-style compensation scheme for Australian passengers lie in the Coalition’s “pay on delay” bill.

There have been mounting calls to introduce a compensation scheme modelled on EU laws. It is understood Australia’s consumer watchdog closely studied the EU scheme in the leadup to the delivery of a landmark aviation white paper.

Proponents of an Australian scheme say forcing airlines to pay cash to passengers delayed as a result of the airline’s operations – but not weather-related issues – could bring airlines with poor on-time performances into line. They argue it could also disincentivise airlines from deliberately scheduling and cancelling flights to retain takeoff and landing slots.

In Europe, passengers whose flights arrive at their final destination delayed more than three hours are entitled to between €250 (A$485) and €600 (A$1,165), depending on the distance of the trip. Longer delays mean passengers can opt to be fully refunded within seven days.

If a delay means a passenger misses a connecting flight on the same reservation, the airline must also pay compensation.

Instead, the draft Australian charter of rights proposes a list of legal entitlements for passengers that airlines will adhere to or face penalties.

The draft charter includes a provision that airline customers in Australia have a right to “prompt and fair remedies and support during and after cancellations, delays and disruptions”.

As part of this, if a flight is disrupted or delayed for more than three hours for reasons within the airline’s control, customers should – at no cost to themselves – receive assistance to rebook with the airline or an alternative carrier, or an option to cancel and receive a full refund for the ticket, as well as a refund on meals, accommodations and transfers incurred from the delay.

Also included in the draft charter is a right for customers to “be treated with dignity and respect in an accessible and inclusive environment”, including airport and airline staff knowing how to help passengers with disabilities or medical issues, as well as not discriminating against any passengers – including if they do not speak English – throughout their journey.

Under the draft charter, airlines will also be forced to provide “accurate, timely and accessible information and customer service” to passengers, including “easy-to-understand conditions” about refunds, charges and fees as well as “prompt updates” about delays and cancellations.

Customer service representatives for airlines in call centres and at airport desks must offer a call-back option to prevent customers waiting long periods for help.

Additionally, airlines and airports will be made to protect the personal information of passengers collected during booking and improve their complaints handling processes, with a target of 24 hours for acknowledgment and 30 days for resolution. Qantas took an average of 97 days to solve customer complaints in 2023, the government noted.

The draft charter also includes a right to safe and timely baggage handling remedies, including mandated reimbursements for temporarily lost luggage and “timely” processing of claims.

Legislation will be introduced next year with the formal ombuds scheme and charter of rights expected to be established by 2026.

The transport minister, Catherine King, said the government was “delivering the strongest-ever protections for Australian travellers to ensure passengers get what they pay for or get their money back”.