Qantas and the competition regulator have reached an agreement in which Qantas will pay a $100 million fine to the federal government and implement a $20 million remediation program to compensate customers.
The agreement remains subject to approval by the federal court.
The ACCC launched legal action against Qantas in August last year alleging the airline continued to sell tickets to flights it had already cancelled and did not notify passengers who had booked tickets on flights that went on to be cancelled in a timely fashion.
The commission alleged that between May and July 2022, Qantas sold tickets to flights for, on average, two weeks after they had been cancelled. The ACCC alleged some flights were still on sale up to 47 days after they had been cancelled. In addition, there were allegations that the airline did not inform customers who had already booked that their flight had been cancelled for an average of 18 days and in some cases, notification came 48 days after the flight was cancelled.
Shortly after the ACCC first brought legal action against the airline, the body’s chair, Gina Cass-Gottlieb, told ABC Radio that the Qantas case was to be a test case to raise the amount big business can be fined for this kind of misconduct.
“We are going to seek a penalty that will underline that this is not just to be a cost of doing business, it is to deter conduct of this nature,” she said at the time.
“The highest penalty to date against a breach of the Australian Consumer Law was $125 million against Volkswagen and we consider that this should be a record penalty for this conduct.
“The ACCC is on a path of wanting to substantially increase the penalties that large corporations in relation to serious conduct pay for failing consumers and so this is going to be an important test for us. We consider these penalties have been too low. We think the penalties should be in hundreds of million not tens of million for breaches of keeping consumers accurately informed.”
In the end, the penalty, at $120 million, did not see any shift in precedent.
In a media release today, the ACCC says Qantas has admitted it misled customers over selling flights it had already cancelled and not informing customers of cancelled flights quickly. The ACCC says Qantas has admitted the misconduct ran from May 21, 2021 until August 26, 2023, affecting flights scheduled from May 1, 2022 until May 10, 2024.
“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. The size of this proposed penalty is an important milestone in enforcing the Australian Consumer Law,” said Cass-Gottlieb.
“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 note that Qantas has also agreed not to repeat this type of conduct in the future, and to make payments as soon as possible to the thousands of consumers who purchased tickets on flights that Qantas had already decided to cancel, or were re-accommodated onto these flights after their original flight was cancelled.”
However, in its statement released earlier today, Qantas’ own statements were more vague.
“When flying resumed after the COVID shutdown, we recognise Qantas let down customers and fell short of our own standards,” said Qantas Group CEO Vanessa Hudson.
“We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry.
“The return to travelling was already stressful for many and we did not deliver enough support for customers and did not have the technology and systems in place to support our people.
“We have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesn’t happen again.
“We thank the ACCC for their cooperation in reaching this outcome, which means we can compensate affected customers much sooner than if the case had continued in the federal court. We are focused on making the remediation process as quick and seamless as possible for customers,” she said.
More than 86,000 customers stand to receive compensation from Qantas, with customers flying domestically or trans-Tasman to receive $225 and those flying further afield internationally to receive $450.
