There’s a better way to cut the Gordian Knot here than a “European-style compensation system”: Any ‘up front’ payments for airfares go into a trust fund that is not accessible to or controlled by the airlines or anyone connected with the airlines.
20% of the airfare is released to the airline when the passenger boards the aircraft for the booked flight – or an alternative, only if agreed by the passenger - and the other 80% is released to the airline if and when the passenger reaches their destination with their baggage (if any). Any flight cancellation or delay longer than a specified period results in the passenger having the right to elect to take a full refund, and the trustee is obliged to pay the refund. If the passenger fails to front for a flight, the airline is entitled to 100% of the payment, unless the airline agrees to a lesser amount, in which case the balance is refunded to the customer. If the passenger cancels with less than a specified period of notice, the airline gets 50%. (Do what you will with the percentages, provided that the outcome incentivises the provision of the service for which the customer originally paid.) The airline would have security, in the sense that it would know that the money is there and will be paid on the provision of the service. The airline would have a ‘bundle of rights’, if you will... But the rights don’t include the airline getting its grubby fingers on the customers’ money unless until the service for which the customer paid is provided.
Qantas did what it was financially incentivised to do: Gather and retain as much money up front from customers as quickly and efficiently as it could, then make it far more inconvenient for the customers to get their money back than accept whatever poor service Qantas ‘managed’ to cobble together as the alternative for what was booked. That behaviour would change, in the blink of an eye, if Qantas wasn’t allowed to take customers' money in advance of the provision of the service. Doesn’t need the ACCC to do anything.
(My presumptive position is that any business which insists on money ‘up front’ for yet-to-be provided goods or services is probably dodgy anyway.)
I’m prepared to set up and administer the system for the (very modest) fee of 0.005% of each payment into the fund and of each payment out of the fund.