By Amelia McGuire
Qantas has admitted it advertised and sold tickets on already cancelled flights to tens of thousands of consumers for a year longer than the consumer watchdog first thought, as the two parties agree to settle the Federal Court case for $120 million in penalties and compensation.
Qantas boss Vanessa Hudson, who started in the top role two months early after the fallout from the allegations, said this revelation did not motivate the airline’s decision to settle the “ghost flights” case instead of defending the claims brought by the Australian Consumer and Competition Commission in August last year.
Qantas boss Vanessa Hudson said the settlement agreement was an important step to restore customer confidence in Qantas.Credit: Louise Kennerley
The ACCC alleged the airline advertised and sold tickets for 8000 flights that had already been cancelled between May and July in 2022.
Upon investigating the ACCC’s claims, Qantas found it had actually sold tickets on already cancelled flights until the watchdog lodged its legal action last August, meaning 86,000 customers had been affected.
“We absolutely were always focused on bringing this to a conclusion. Part of the focus that we have as an organisation is around being transparent and taking accountability,” Hudson said in an interview on Monday.
“We absolutely have maintained and continue to maintain that we did not take fees for no service, that we would not take fees for no service and that the ACCC is no longer proceeding with this part of its claim,” she said.
Under its settlement deal with the competition regulator, Qantas has agreed to pay $100 million in penalties to the ACCC and a further $20 million in compensation to the 86,000 customers who were sold the tickets. The deal is subject to Federal Court approval.
The airline agreed to pay $225 in compensation to domestic ticket holders and $450 to international ticket holders. The payments will be in addition to any remedies the consumers have already received from the airline, including alternative flights or refunds.
The ACCC walked back its claims against the airline about wrongful acceptance of payment for these flights, but Qantas agreed it should not have misled customers by advertising the flights even though it did not accept fees for no service.
“Our teams were focused on trying to minimise the disruption for our customers and move them to other flights, but we didn’t have the technology or the systems in place to support them, which meant that customers waited too long to be told that their flight had been cancelled,” Hudson said.
The total payout is less than half the $250 million in expected penalties when the ACCC first launched its claims against Qantas. The watchdog’s chair, Gina Cass-Gottlieb, last year said she sought the largest penalty against the airline to deter other companies from similar misdeeds.
Cass-Gottlieb told this masthead Qantas had behaved egregiously and that the settlement made clear that customers were entitled to feel they were owed their flight. She said the penalty agreed with Qantas reflected the airline’s willingness to accept its misdeeds, but that the ACCC would have pursued a higher penalty if the carrier had not withdrawn its defence.
“We’re confident all aspects of the settlement are sufficient,” Cass-Gottlieb said. “Qantas’ conduct was egregious and unacceptable. We expect that this penalty, if accepted by the court, will send a strong deterrence message to other companies.
“Regardless of the terms in the fine print, when a ticket is sold to a customer and they’re not notified their flight has been cancelled promptly, a reasonable Australian consumer is entitled to assume they continue to have a ticket with that flight and should be notified within a reasonable time to the contrary, so they can consider their options.”
She said the additional compensation was necessary, regardless of whether those affected had already been refunded or were re-accommodated on new flights. She said the ACCC had secured an enforceable commitment from Qantas to notify customers as soon as practicable in the event of a flight cancellation from now on.
“There are multiple contraventions here. Qantas did obtain benefits from their conduct, including in that those customers in effect by not being notified earlier may have otherwise sought carriage on another airline instead of being limited to taking re-accommodation with Qantas,” Cass-Gottlieb said.
Qantas said 94 per cent of the passengers affected were flying on domestic or trans-Tasman routes and 6 per cent were flying internationally. It said more than 80 per cent of passengers on the domestic routes were offered an alternative flight departing before or within three hours of their scheduled departure time. It said more than 60 per cent of the international passengers were offered an alternative flight which departed before or within 12 hours of the originally scheduled flight.
The watchdog’s allegations were one of a string of scandals that decimated Qantas’ ASX-listed share price at the end of last year and led to the early exit of the airline’s then chief executive officer, Alan Joyce, who announced he would retire two months ahead of schedule days after the case was launched.
RBC analyst Owen Birrell said the penalty would decrease the carrier’s earnings by less than 1 per cent, and the settlement was an “incremental positive, removing another post-COVID brand and valuation overhang from the stock”.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.