By Amelia McGuire
Qantas Airways faces multimillion-dollar penalties in the Federal Court, after the consumer watchdog alleged the airline engaged in deceptive conduct by advertising tickets for thousands of already cancelled flights in 2022.
The Australian Competition and Consumer Commission (ACCC) alleges Qantas disrupted the travel plans of hundreds of thousands of people between May and July last year, after it advertised sales on 8000 flights for two weeks after their cancellation.
The consumer watchdog has launched a court case against Qantas, claiming the airline falsely advertised 8000 flights it had already cancelled.Credit: Bloomberg
Each breach of consumer law faces a maximum penalty of $10 million, or three times the total benefits obtained. If the total turnover cannot be determined, the business might have to pay 10 per cent of its annual multibillion-dollar turnover. It is unlikely the court would consider implementing the maximum penalty.
The Federal Court action was announced as Qantas confirmed it would scrap the expiry date on $570 million worth of refunds for people whose flights were cancelled due to COVID-19 border closures.
Qantas on Thursday confirmed that all customers who had their flights cancelled by the airline due to a COVID-19 lockdown would be able to request a refund indefinitely, following Thursday’s report in this masthead about the plan.
According to the ACCC, Qantas kept selling tickets on its website for an average of more than two weeks, and up to 47 days in some cases, after those flights were cancelled. The flights were scheduled to depart between May and July 2022.
How Qantas allegedly failed customers
- QF93 was scheduled to depart from Melbourne to Los Angeles on May 6, 2022. On April 28, Qantas made the decision to cancel the flight. Despite this, it did not remove the flight from sale until May 2, and did not inform existing ticketholders of the cancellation until May 4 (two days before the flight).
- QF81 was scheduled to depart from Sydney to Singapore on June 4, 2022. On February 8, Qantas cancelled the flight, which was not removed from sale until March 27. Existing ticketholders were not informed of the cancellation until March 28.
- QF486 was scheduled to depart from Melbourne to Sydney on May 1, 2022. On February 18, Qantas cancelled the flight, which was not removed from sale until March 15. Existing ticketholders were not informed of the cancellation until March 16.
- QF649 was scheduled to depart from Sydney to Perth on July 30, 2022. On February 18, Qantas cancelled the flight, which was not removed from sale until March 7. Existing ticketholders were not informed of the cancellation until March 8.
- Other examples the ACCC listed of flights affected were QF63 scheduled to depart from Sydney to Johannesburg on July 31, 2022; QF1785 scheduled to depart from Gold Coast to Sydney on May 1, 2022; QF696 scheduled to depart from Adelaide to Melbourne on July 23, 2022; QF1764 scheduled to depart from Canberra to Gold Coast on June 27, 2022; QF513 scheduled to depart from Brisbane to Sydney on June 8, 2022; QF45 scheduled to depart from Melbourne to Denpasar on May 1, 2022.
The consumer watchdog also alleges that ticket holders on about 10,000 flights were not told their flight had been cancelled for between 18 and 48 days.
In about 70 per cent of flights cancelled during those months, “Qantas either continued to sell tickets for the flight on its website for two days or more, or delayed informing existing ticket holders that their flight was cancelled for two days or more, or both”, the ACCC said.
ACCC chair Gina Cass-Gottlieb said the disruption “left customers with less time to make alternative arrangements and may have led them to paying higher prices to fly at a particular time”.
Treasurer Jim Chalmers said the allegations against Qantas were “deeply concerning”.
Qantas chief executive Alan Joyce appears at a Senate hearing on Monday.Credit: Eamon Gallagher
“This is the consumer watchdog doing its job and a reminder that businesses need to do the right thing by people,” he said. “Breaches of consumer law carry heavy penalties.”
Chalmers said the federal government’s competition review would canvass the aviation sector, despite comments from Assistant Competition Minister Andrew Leigh this week that confirmed aviation would not be included in the review, but in a green paper.
Sydney Airport boss Geoff Culbert and Australian Airports Association chief executive James Goodwin said the ACCC’s allegations prove that Qantas had been hoarding slots to prevent access to other carriers, and called for the reinstatement of the ACCC’s airline monitoring report.
“Slots are owned by Australian taxpayers, and they should be used to benefit the public, not incumbent airlines,” Culbert said.
Qantas said it would examine the ACCC allegations and respond in full to them in court. The group reported a $2.47 billion record profit last week, but its share price has fallen by almost 10 per cent to $5.91 this month.
“It’s important to note that the period examined by the ACCC was a time of unprecedented upheaval for the entire airline industry. All airlines were experiencing well-publicised issues from a very challenging restart, with ongoing border uncertainty, industry-wide staff shortages and fleet availability causing a lot of disruption,” the airline said.
Meanwhile, Qantas’ concession on flight credits follows intense public pressure, which culminated at a frosty Senate hearing into the cost of living on Monday and a letter from the ACCC, which expressed “strong concerns” with the carrier’s planned December expiry date for the refunds.
The business accrued $2 billion worth of cancelled flights across Qantas, Jetstar and overseas based bookings due to lockdowns to October 2021.
Qantas confirmed on Thursday there was now $570 million yet to be returned to affected customers across the three arms of the business, after a hostile exchange with senator Tony Sheldon on Monday. Almost $365 million belongs to Qantas customers in Australia, $90 million belongs to Jetstar customers in Australia and $115 million belongs to overseas customers. About $180 million are bookings made through travel agents.
Qantas is already facing a class action on behalf of disrupted passengers who allege they were unable to be compensated for their cancelled flights.
The airline confirmed on Thursday it would contact all affected passengers to alert them of the new COVID-19 flight credit policy, which will come into effect from September 4.
Outgoing Qantas boss Alan Joyce said the airline had scrapped the expiry date in the hope customers’ faith in the airline would be restored.
“We know the credit system was not as smooth as it should have been. And while we’ve improved it recently and extended the expiry date several times, people lost faith in the process. We hope this helps change that,” Joyce said.
The airline is also offering a deal to double frequent flyer points as a way to encourage passengers to consider booking another flight instead of demanding a cash refund.
Prime Minister Anthony Albanese said the ACCC was doing its job, which “is to look after consumers”.
“Something I called for in recent days, of Qantas recognising the need to look after those people who had made bookings for flights that have been cancelled, [is] to not have those credits expire and to be able to receive either a refund or a use of their flights,” Albanese said.
This is the fourth time Qantas has amended its COVID-19 refund and flight credit policy, in an attempt to lower the multibillion-dollar credit balance it accrued over the period.
Passengers were previously eligible for a refund until December 2023. Those who already obtained flight credits from the company still have until the end of this year to book a flight.
Customers who booked flights through a travel agent can also get a refund, while those with a flight credit from Jetstar will also be able to use them indefinitely.
Qantas’ biggest rival, Virgin Australia, has around $100 million in COVID-19 credits yet to be used, down from a total sum of $1.2 billion accrued between September 2020 and July 2022.
Virgin’s COVID-19 credits require passengers to book and travel by the end of December 2023. However, Virgin has also issued credits to travellers who were disrupted due to the carrier’s stint in administration. These “Future Flight” credits are subject to the airline’s standard credits policy, which means only a certain number of seats on any flight can be booked by those trying to use them.
Regional Express, Australia’s third domestic carrier with about 5 per cent of the market, has refunded all passengers affected by cancellations over the lockdown period.
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