Qantas should pay $250m fine, says ACCC boss Gina Cass-Gottlieb

Gina Cass-Gottlieb says she wants Qantas to face a fine of $250m if the ACCC case against the airline – for allegedly selling tickets for 8000 cancelled flights – succeeds.

Australian Competition and Consumer Commission chair Gina Cass-Gottlieb says she wants Qantas to face a fine of over $250m if the ACCC case against the airline – for allegedly selling tickets for 8000 cancelled flights – succeeds.

These “ghost flights” that were cancelled over a period of three months in 2022 are being considered a breach of consumer law by the ACCC, which announced it was taking legal action yesterday.

She was asked on Radio National on Friday morning if she thought Qantas should receive a penalty of around $250 million – more than double the current $125 million record penalty a company has received for breaching consumer law.

“We consider that this should be a record penalty for that conduct,” Ms Cass-Gottlieb said.

She said that the high penalty would be a clear way “to deter conduct of this nature” and scare companies that would consider doing the same.

When asked if companies were scared enough, she replied with “not sufficiently”.

“We think the penalties should be in the hundreds of millions, not tens of millions for breaches.”

A revolt by more than 1000 ­Qantas customers was the trigger for unprecedented court action alleging the airline sold tickets for flights that had been cancelled up to 47 days before.

The Australian Competition and Consumer Commission filed the lawsuit in the Federal Court on Thursday, just as Qantas was about to announce it was scrapping the expiry date on $570m worth of unused travel credits.

The court action looks to set an ignominious end to Qantas chief executive Alan Joyce’s 15-year stint – which finishes in two months – and comes a week after the airline posted a record $1.74bn net profit.

Ms Cass-Gottlieb said the watchdog began looking at flight cancellations after receiving more than 2600 complaints about Qantas, half of which related to that issue.

“That raised some concerns but the extent of the issue wasn’t apparent until we investigated further,” she said.

The ACCC used its powers of compulsory information gathering to get details from Qantas, ­resulting in allegations the airline engaged in “false, misleading or deceptive conduct” in relation to cancelled flights.

It was alleged the investigation identified more than 8000 cancelled flights for which tickets were offered for sale on average 16 days later. They were among over 10,000 flights that ­appeared on customers’ “manage my booking” page for an average of 18 days after they were cancelled, giving the impression they were going ahead.

Qantas has been hit with legal action by the consumer watchdog over claims it was advertising flights that were cancelled. Picture: Getty Images

Most of the flights were scheduled between May and July 2022, with some cancelled by Qantas as early as February 8. In those cases, the flights were not pulled from sale until late March and ticketholders weren’t told of the cancellations for at least another day or two.

It was also alleged Qantas sold 21 tickets after cancelling a July 29 Sydney to San Francisco flight, with the last one sold 40 days after cancellation.

Ms Cass-Gottlieb would not comment on whether the sales were part of a deliberate strategy to increase revenue or the result of a systems failure.

“We allege that Qantas’ conduct in continuing to sell tickets to cancelled flights, and not updating ticketholders about cancelled flights, left customers with less time to make alternative ­arrangements and may have led to them paying higher prices to fly at a particular time not knowing that flight had already been cancelled,” she said.

The ACCC found the flights were cancelled for reasons ­including “network optimisation in response to shifts in consumer demand, route withdrawals or ­retention of takeoff and landing slots at certain airports”.

“However, this case does not involve any alleged breach in ­relation to the actual cancellation of flights, but rather relates to Qantas’ conduct after it had cancelled the flights,” Ms Cass-Gottlieb said.

A Qantas spokesman said the time in question was one in which “all airlines were experiencing well publicised issues from a very challenging restart”.

“Ongoing border uncertainty, industry-wide staff shortages and fleet availability were causing a lot of disruption,” he said, adding that the ACCC allegations were being taken seriously.

Ms Cass-Gottlieb said they did not have evidence of similar conduct by other airlines.

Jim Chalmers described the ­allegations as “deeply concerning” but declined to comment further.

“This is the consumer watchdog doing its job and a ­reminder that businesses need to do the right thing by people,” the Treasurer said.

Airports were quick to point out their own concerns about Qantas cancellations, and called for the government to reinstate the ACCC’s airline monitoring role. The quarterly reports on airline performance, fares and competitive behaviour were cancelled in June.

Australian Airports Association CEO James Goodwin said “scheduled and co-ordinated cancellations not only affect airline customers but disrupt airport operations”.

“At airports where slots are at a premium this can have the ­effect of limiting other airlines from using those potential runway allocations,” he said.

ACCC chair Gina Cass-Gottlieb says a detailed investigation into Qantas’s flight cancellations has been conducted. Picture: Sam Ruttyn

“This is more justification for Minister (Catherine) King to ­reinstate formal ACCC airline monitoring after she decided earlier this year it wasn’t necessary.”

Canberra Airport CEO ­Stephen Byron agreed.

“Qantas has 66 per cent of the domestic market and makes 80 per cent of the profits,” he said.

“This shows that their conduct and behaviour does need to be monitored.”

Opposition transport spokeswoman Bridget McKenzie said the government’s failure to ­extend airline monitoring raised more questions about its commitment to competition and lower fares.

“Australians are paying more, reliability is going down, not up, and flight cancellations are more, not less, frequent,” Senator McKenzie said.

The ACCC also confirmed it was no longer investigating ­Qantas over its handling of Covid-related travel credits ­issued when flights were ­cancelled.

Ms Cass-Gottlieb welcomed the airline’s decision to axe the December 31 expiry date.

Ms Cass-Gottlieb said allowing Qatar Airways more flights into Australia would have reduced airfares for customers.

Weighing into the government’s decision to reject the bid from Qatar Airways, Ms Cass-Gottlieb said the issue did not fall within the remit of the consumer watchdog but argued accepting the application would have left customers better off.

“The ACCC welcomes every possible opportunity to increase access and choice and competition,” she told ABC radio.

“In this case the decision has been made under an international agreement … and the ACCC has no role in it.”

“It is not a matter that we consider we are in any way directly or indirectly involved in.

“We would welcome more competition.”

Asked if Qatar was given the extra flight capacity whether it would lower airfares, Ms Cass-Gottlieb replied: “Yes.”

“Virgin has given an estimate of 40 per cent. That is difficult to predict. That’s their estimate. The point we are very well aware of is the test in national interest here will include additional factors to competition. And we don’t know what was considered there.”