Virgin Blue has taught its cashed-up rival Jetstar a lesson in customer service, feeding and sheltering passengers stranded overnight because of cancelled flights.

It came just six days after Qantas-owned budget carrier Jetstar kicked 300 passengers out of Sydney airport overnight, forcing them to take refuge from a thunderstorm in bus shelters.

On February 6, another storm grounded four flights and low-cost carrier Virgin Blue offered to compensate travellers up to AU$200 for last-minute accommodation. It also pressured Sydney Airport into keeping its domestic terminal open.

Virgin Blue employees also worked overtime to hand out refreshments including bottled water, orange juice, biscuits as well as chips.

"Virgin Blue has been really good and has kept us well informed," said Kate, from Sydney, who gave her first name only.

Lisa, from the US, said: "I'm from LA and I'm not happy about the rain or the situation, but they (Virgin Blue) have been absolutely amazing."

But John McCallum, from Wollongong, said he was disgruntled by the situation. "When they tell you at midnight that you need to find accommodation, what are you meant to do? You are stuck," he said. But it was a far cry from the hundreds of Jetstar passengers forced to either camp outside the terminal or walk - with their luggage - to the 24-hour international terminal 2km away.

There were reports of a pregnant mother being forced out into the rain with a bathroom and a diabetic woman unable to take her insulin shots because she could not find food.

On February 6, Virgin Blue passengers simply grabbed their luggage and filed into waiting cabs headed to hotels they would later be repaid for.

Others stretched out across the domestic terminal, making seats into beds, chatting among themselves and watching television.

It was an easy PR victory for Virgin Blue, which asked the airport to stay open, offloaded food from the plane and kept back four staff members to help stranded customers.

In contrast, the day after the Jetstar disgrace last week, its spokesman Simon Westaway said: "As a condition of carriage for weather-related delays, we're not compelled to find accommodation ... Unfortunately it was out of our hands."

The Jetstar fiasco, which left politicians and consumer groups outraged, was the biggest publicity nightmare for the low-cost airline since it took to the skies four years ago.

The incident also raised serious questions about the true value of budget airline travel, a market Qantas set up Jetstar to specifically enter.

There have already been concerns that the sometimes ridiculously low airfares advertised by budget carriers are overshadowed by taxes and surcharges.

Now Jetstar faces an investigation by Victoria's consumer affairs lobby, with hundreds of passengers vowing to never fly the airline again.

Customers on February 6's grounded Virgin Blue flights, to Melbourne and Brisbane, said they had paid slightly more for their tickets.