Qantas to repay passengers $20m for cancelled flights and faces $100m fine

Qantas to repay passengers $20m for cancelled flights and faces $100m fine

Photo: Joseph Bobadilla via Unsplash

Qantas Airways (ASX: QAN) has agreed to pay about $20 million to more than 86,000 ticketholders for cancelling flights on them between 2021 and 2023 as part of a settlement agreement following action brought by the consumer watchdog.

The company also faces a fine of $100 million as the Australian Competition and Consumer Commission (ACCC) applies for the Federal Court to impose a hefty financial penalty on Qantas for breaching Consumer Law.

The settlement relates to an initial claim of about 8,000 flights that were cancelled by Qantas between May 2021 and July 2022 – flights that the airline has admitted it continued to advertise to customers.

But Qantas has admitted that the practice continued a lot longer than originally detailed by the ACCC with the misconduct stretching from 21 May 2021 until 26 August 2023, affecting tens of thousands of flights scheduled to depart between 1 May 2022 and 10 May 2024.

The ACCC had alleged that Qantas had engaged in false, misleading or deceptive conduct as it kept selling tickets on its website for an average of more than two weeks, and in some cases for up to 47 days, after the cancellations.

While the ACCC alleged that Qantas made many of these cancellations ‘for reasons that were within its control’, the early defence filed by the airline last year rejected the claim that it knowingly disrupted the travel plans of thousands of passengers – arguing that no airline can guarantee that any flight can proceed.

Following admissions subsequently made by Qantas, the airline has agreed to a court-enforceable undertaking to pay about $20 million to more than 86,000 customers. These customers comprise those who were sold tickets on flights that the company had already decided to cancel, or in some cases who were reaccommodated on these flights after their original flights were cancelled.

Qantas will pay $225 to domestic ticketholders and $450 to international ticketholders even if they received other remedies from Qantas, such as alternative flights or refunds.

“We are pleased to have secured these admissions by Qantas that it misled its customers, and its agreement that a very significant penalty is required as a result of this conduct,” says ACCC chair Gina Cass-Gottlieb.

“The size of this proposed penalty is an important milestone in enforcing the Australian Consumer Law,” she says.

“Qantas’ conduct was egregious and unacceptable. Many consumers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled.

“We expect that this penalty, if accepted by the court, will send a strong deterrence message to other companies.

“Importantly, it demonstrates that we take action to ensure that companies operating in Australia communicate clearly, accurately and honestly with their customers at all times.”

The ACCC launched legal action against Qantas in August last year, a week after the company reported a $1.7 billion profit for FY23.

Following the court-enforceable undertaking, Qantas plans to contact affected consumers by 10 July this year to inform them of their refunds, with the ACCC noting that they will receive communications from Qantas and Deloitte Australia, which is administering the payments on behalf of Qantas.

“We acknowledge Qantas’ cooperation in ultimately deciding not to contest this case, admitting that the conduct occurred for a longer period, and seeking to resolve this early and for the benefit of consumers,” says Cass-Gottlieb.

Qantas has also undertaken to notify customers of cancelled flights as soon as practicable, and no more than 48 hours from deciding to cancel the flight.

It has also undertaken to stop selling cancelled flights as soon as practicable, and in any event within 24 hours of its decision to cancel. The undertaking also applies to the company’s budget airline Jetstar.

Qantas says it will also review its consumer compliance program and appoint independent auditors who will monitor its compliance.

Meanwhile, consumer advocacy group Choice has described the settlement achieved by the ACCC as a “significant result” that sends “a very clear message to all airlines and travel service providers” who mislead consumers.

“Over 80,000 consumers have had their travel plans derailed by Qantas’ behaviour over a number of years and these payments are already well overdue,” says Rosie Thomas, the director of campaigns and communications at Choice.

“We’ve heard from countless consumers about having to fight tooth and nail to receive refunds or compensation from airlines for delayed or cancelled flights. Consumers should not need regulator action to receive compensation when it’s owed.”

A Choice survey of almost 9,000 people last year found that of those who pursued a refund or compensation for a cancelled flight, one in five had to wait more than six months.

“Choice is calling for the establishment of a new travel and airline ombuds scheme and stronger rights to refunds and compensation for cancelled flights,” says Thomas.

“We look forward to the federal government’s upcoming Aviation White Paper to set out a clear plan to bring Australia’s airline consumer protection framework in line with comparable international jurisdictions.”

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