Qantas to pay $120 million after settling ACCC case for misleading customers
Qantas has agreed to pay $100 million in penalties to the consumer watchdog after admitting it misled customers over advertising tens of thousands of airfares for flights which had already been cancelled last year.
The country’s biggest airline is also preparing to pay a further $20 million in payments to 86,000 customers who were sold the tickets under its settlement deal with the Australian Competition and Consumer Commission which is now subject to approval by the Federal Court.
Qantas boss Vanessa Hudson said the settlement agreement was an important step to restore customer confidence in Qantas.
The ACCC launched legal action against Qantas in August last year, alleging the business advertised and sold tickets for 8000 flights that had already been cancelled over a two-month period in 2022.
The consumer watchdog 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 they did not accept fees for no service.
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-Gotlieb, said last year she sought the largest ever penalty against the airline to deter other companies from similar misdeeds.
Qantas boss Vanessa Hudson, who started in the top role two months early after the fallout from the allegations, said the settlement agreement was an important step to restore customer confidence in Qantas.
“When flying resumed after the COVID-19 shutdown, we recognise Qantas let down customers and fell short of our own standards. 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,” Hudson said.
Qantas said 94 per cent of the passengers impacted were flying on domestic or trans-Tasman routes, with the remaining 6 per cent flying internationally. It also 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 also 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 ACCC chair Gina Cass Gotlieb said the admission that Qantas misled its customers is an important milestone in enforcing the Australian Consumer Law.
“Qantas’ conduct was egregious and unacceptable. Many customers 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,” Cass-Gotlieb said.
The ACCC said Qantas also admitted its misconduct continued from May 2021 until August 2023 on flights scheduled to depart up until May 10 this year.
The watchdog’s allegations were one of a string of scandals which decimated Qantas’ ASX listed share price at the end of last year and led to the early exit of Qantas’ then-chief-executive, Alan Joyce, who announced he would retire two months ahead of schedule days after the case was launched.
The airline agreed to pay $225 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 and Qantas will now jointly ask the Federal Court to approve the settlement deal and penalties.
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