Qantas to pay $120m for allegedly selling tickets to flights that had already been cancelled

Qantas has come to an agreement with the ACCC to resolve court proceedings alleging it sold tickets for more than 8,000 flights it had already cancelled. Photograph: Phil Noble/Reuters

Qantas will fork out $100m as a civil penalty and pay $20m to customers in compensation, after striking a deal with the consumer watchdog over landmark legal action for allegedly selling tickets to flights that had already been cancelled in its system.

On Monday, Qantas announced it had come to an agreement with the Australian Competition and Consumer Commission (ACCC) to resolve the court proceedings lodged in August last year, alleging it had advertised and sold tickets for more than 8,000 flights that it had already cancelled in its internal system, revelations which precipitated the early retirement of the former CEO Alan Joyce.

In a statement, Qantas said it would “commence a projected $20 million remediation program for impacted passengers, with payments to customers ranging from $225 to $450, and subject to the approval of the Federal Court of Australia, will pay a $100 million civil penalty”.

“The ACCC and Qantas will shortly seek approval of the proposed penalty by the Federal Court. However, Qantas intends to commence the remediation program in advance of the Court approval process,” the statement said.

The chair of the ACCC, Gina Cass-Gottlieb, said as part of the settlement Qantas had admitted that it misled consumers. “Qantas’s 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,” Cass-Gottlieb said.

She said Qantas had also undertaken to “not engage in this type of conduct in the future”.

The Qantas CEO, Vanessa Hudson, said “today represents another important step forward as we work towards restoring confidence in the national carrier … we have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesn’t happen again”.

Qantas will facilitate payments to 86,597 consumers who, between 21 May 2021 and 26 August 2023, booked or were re‑accommodated on a domestic or international flight scheduled to depart between 1 May 2022 until 10 May 2024 after Qantas had already decided to cancel it.

Of customers affected, 94% were flying on domestic or trans-Tasman routes, with the remainder flying on the international network. The financial hit of the penalty and remediation program would be recognised as an expense in the group’s statutory income statement for the current financial year.

In August, the ACCC lodged proceedings in the federal court alleging Qantas was continuing to advertise and sell tickets for more than 8,000 flights on its website for an average of two weeks, and in some cases up to 47 days, after cancelling the flights.

The ACCC closely monitored the airline’s flight data between May and July 2022, finding the carrier cancelled about 15,000 out of 66,000 domestic and international services – almost one in four flights.

The watchdog also alleged that for more than 10,000 flights scheduled over the same period in 2022, “Qantas did not notify existing ticketholders that their flights had been cancelled for an average of about 18 days, and in some cases for up to 48 days”.

Qantas, in its defence to the legal action, claimed it doesn’t sell customers tickets to any particular flight, but rather a “bundle of rights” that includes alternative options in the event of cancellations, as it responded to allegations it sold tickets to thousands of already cancelled flights.

The airline also claimed that informing customers that it had already cancelled flights they were booked on would have created “uncertainty and frustration” and overwhelmed its phone lines, as the airline accused the competition watchdog of ignoring the realities of the aviation industry.

Prior to the settlement, Cass-Gottlieb had said she wanted to see Qantas hit with penalties of at least $250m, twice the current record penalty.

The $120m financial hit comes amid a profitable period for Qantas. In February, Hudson handed down a $1.25bn half-year pre-tax profit in her first financial results leading the airline, and rewarded shareholders with a $400m buyback after a tumultuous period that unseated her predecessor. The profit result was tracking 13% down from the record $2.47bn full-year profit posted in 2022-23.

Separately, Qantas is still awaiting the outcome of federal court proceedings to determine how much compensation it must pay over the illegal outsourcing of 1,700 ground handlers early on in the pandemic, after losing repeated appeals to have the finding against it overturned. The union bringing the case has suggested compensation could exceed $100m.