An ombudsman will police how airlines treat customers and enforce a passenger rights charter to ensure timely refunds and possibly cash compensation for delayed and cancelled flights under landmark Australian aviation reforms.

The Albanese government will release its much-anticipated aviation white paper on Monday which will also boost protection for passengers with disabilities who have historically been mistreated by airlines. Carriers will have to adhere to new standards and accommodate a broader range of wheelchairs.

It is not clear how the federal government will address concerns about competition, which has been the most pressing issue for the industry after the collapse of Bonza and Rex’s financial turmoil that led to the regional airline entering administration and axing jet flights between capital cities.

Industry experts and the competition watchdog have warned that the duopoly held by Qantas Group, including budget carrier Jetstar, and Virgin Australia could now increase air fares and feel little pressure to improve the customer experience. Qantas and Virgin control more than 90% of the Australian market.

Ombudsman scheme

Heeding calls from consumer advocates, the government will establish an aviation industry ombudsman to replace the existing airline customer advocate. The existing body is funded and run by the airlines and critics have labelled it toothless due to its inability to order refunds or compensation.

The new ombudsman scheme will involve an external dispute resolution service for passengers to lodge complaints about airline and airport misconduct – and will have the power to direct companies to pay remedies to customers if they have failed in their obligations.

The scheme will publish reports on airline and airport conduct, make recommendations to the government and refer instances of misconduct to the Australian Competition and Consumer Commission for investigation, enforcement and potential legal action.

It will be backed by a legislative framework and be similar to those in other industries, such as telecommunications.

“Airlines will also have to ‘show cause’ – that is, report reasons for delays and cancellations as part of the regular reporting to the government and the ombudsperson can request additional information on specific flights,” the government said. “This will increase transparency and public accountability and allow the government to identify if further regulation is needed.”

An interim ombudsman will be appointed shortly, with a consultation paper to be released on Monday seeking feedback from the public regarding specifics. Legislation will be introduced next year with the formal scheme expected to be established by 2026.

Customer rights charter

Airline passengers in Australia will have a list of legal entitlements that airlines will adhere to or face penalties.

The customer rights charter – part of the ombudsman legislation – will set out “reasonable and fair” conduct by airlines and airports, including how they treat passengers in the event of delays and cancellations and how they communicate disruptions.

The charter will set out when airlines must refund passengers and that it has to be in the form originally paid and in a prompt timeframe – spelling the end of carriers offering flight credits and vouchers.

It will also state what is a reasonable delay and determine if the delay or cancellation was within an airline’s control – a measure set to test Qantas and Virgin’s insistence that their high cancellation rates on routes out of Sydney airport are not the result of a deliberate strategy to schedule more flights than they intend to operate before cancelling them to block rival airlines from accessing scarce slots.

The exact details of the charter will be determined after consultation but the government has flagged it could cover meals, accommodation, refunds and “monetary compensation” when a flight is delayed or cancelled.

The government has stopped short of announcing a EU-style compensation entitlement forcing airlines to pay customers cash for delayed and cancelled flights, and instead left the door open for the interim ombudsperson to determine if such a scheme should form part of the rights charter they have been tasked with drafting.

In Europe, passengers whose flights arrive at their final destination with a delay of more than three hours are entitled to between €250 (A$485) and €600 (A$1,165), depending on the distance of the trip.

In schemes overseas, 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.

In Australia compensation is now at the discretion of airlines. The federal Coalition is in favour of a monetary compensation scheme for air passengers.

The Labor transport minister, Catherine King, said: “Too many Australians have been left out to dry when flights are cancelled or disrupted and it’s impossibly complex to get a refund or even contact a company representative.

“Customers deserve to get their money back if they are owed it. Full stop.”

Treatment of passengers with disabilities

The government will pledge to strengthen rules forcing airlines to improve their treatment of passengers with disabilities.

Disability advocates have long complained airlines breach the Discrimination Act with rules requiring passengers to transfer into certain wheelchairs, to travel with a carer or by limiting how many passengers with wheelchairs can be on a flight. Such rules would be banned.

The government will create new aviation-specific disability standards – outlining rights that people with disabilities have during air travel.

Guardian Australia has previously reported a lack of coordination between airports, airlines and third-party ground handler teams has left passengers with disabilities stranded.

Airlines will be required to offer passengers with disabilities the option of creating an “assistance profile” so they can store their personal data for future bookings, with information about assistance animals and wheelchair specifications.

The disability royal commission heard that people with disabilities were routinely subject to violence, abuse, neglect and exploitation when flying domestically, with participants telling the inquiry they felt airlines were “dehumanising” them and complaints were rarely followed up.

King said: “People have been left stranded on planes, forced to return to their departure port or had to put up with poor treatment due to a lack of access to appropriate facilities at their destination.”