Jetstar slapped with class action for refusing refunds over cancelled flights during COVID

Melbourne legal firm Echo Law has announced it has filed the Federal Court class action, alleging that the Qantas Airways’ (ASX: QAN) budget subsidiary was legally obliged to issue refunds but instead issued credits to a majority of affected customers that were subject to significant restrictions.

“Accordingly, those travel credits were of much lower value to customers than the refunds to which customers were entitled,” says Echo Law.

“By acting in this way, Jetstar has enjoyed significant financial benefits at its customers’ expense.

“We consider that affected Jetstar customers may be entitled to compensation, even if they have used the travel credits they were issued.”

Echo Law, which last year served a separate claim against Qantas over its credits program, says it served the claim upon Jetstar this morning.

“Jetstar promotes itself as a values-driven, low fare airline committed to helping ‘more people fly, more often’, yet it’s a highly profitable part of the Qantas Group, and when COVID caused widespread flight cancellations it put those profits ahead of its customers’ interests”, says Andrew Paull, partner at Echo Law.

“Jetstar customers were pushed into holding hundreds of millions of dollars in restricted travel credits, even though this wasn’t what those customers had agreed to as part of the airline’s terms and conditions. The right thing for Jetstar to do when it cancelled all those flights was to return its customers’ money without delay.”

The class action alleges that while Covid-19 travel restrictions “frustrated” Jetstar travel contracts, causing these contracts to be automatically terminated, it also gave customers a right to automatically recover money paid under those contracts.

“Under Australian law, an event is ‘frustrating’ if it occurs without default of either party and renders the performance of contractual obligations impossible or radically different from what was originally contemplated,” says Echo Law.

“Jetstar’s failure to issue refunds was a breach of contract. By holding customer’s funds that ought to be refunded, Jetstar attained unlawful financial benefit (including from the interest accrued),” it says.

The law firm is alleging that Jetstar engaged in “misleading or deceptive conduct in contravention of Australian Consumer Law, by misleading customers as to their rights in the event of widespread COVID cancellations”.

Similar to the class action against Qantas, which Echo Law says is ongoing, the latest action is seeking refunds and compensation for customers from Jetstar.

The law firm notes that the legal underpinning of the claims differs based on the different terms and conditions applicable to each airline.

“Like Qantas, we allege Jetstar breached the law by failing to be transparent and by failing to refund its customers,” says Paull.

“It held onto ordinary Australian’s money and expected customers to just be happy with credits, which we allege it was not entitled to do. It now needs to be held accountable and refund that money with interest.”

Paul says that while customers “sat at home not able to enjoy the benefits of flying, Jetstar enjoyed the significant financial benefits of holding hundreds of millions of dollars in customer payments including interest and reduced borrowing costs”.

“It is unfair, and we allege unlawful, that Jetstar profited from holding onto its customers’ money for flights it had cancelled,” he says.

“Many Jetstar customers ended up paying the airline more than their original booking to use their credits on new fares, as they were led to believe they had little choice but to do that or else lose the value of the flights they paid for. This is another unjust enrichment Jetstar has enjoyed.”

Jetstar says it will “review the claims filed in the class action this morning”.

“Last year we removed expiry dates for COVID vouchers so they can be used indefinitely,” says a Jetstar spokesman.

“These vouchers are also multi use, meaning they can be used across multiple bookings and for multiple people.”

In August last year, Jetstar removed expiry dates from all Jetstar Airways COVID vouchers, although these vouchers are not redeemable for cash.