According to ACCC Qantas pays a fine of $100 million and $20 million as compensation to its customers.
Qantas airlines and the Australian Competition and Consumer Commission (ACCC) recently announced the settlement of the airways. The airline has agreed to pay $120 million (AUD) to settle allegations of misleading conduct over ticket sales on ‘ghost flights’. According to ACCC Qantas pays a fine of $100 million and $20 million as compensation to its customers. The redemption payments range from $225 to $450 for the settlement.
This is the largest penalty in corporate that ACCC has ever agreed to. Although, there was a record penalty breach of Australia’s consumer law which was $125 million, issued to Volkswagen in 2019 for tricking their customers over diesel emissions.
ACCC launched the legal action against the airlines in august 2023 claiming the sale of 8000 tickets for “ghost flights”, flights that have been cancelled in their system, between May and July 2022. The scandal centred on the sale of tickets despite the cancellation of the flights and the failure to adequately notify customers of the cancellation, and its offering of flight credits with an expiry for trips impacted by Covid-19. Although the airlines admitted the misconduct actually spread from May 21, 2021 until August 26, 2023, affecting tens of thousands of flights.
The airlines was accused of taking an average of 18 days to notify ticket holders for 10,000 flights that their trip had been cancelled. In some cases, according to ACCC, Qantas took about 48 days for the notification.
Qantas will start the redemption program in advance of the Court approval process though the proposed penalty still needs to be approved by the Federal court. “Today represents another important step forward as we work towards restoring confidence in the national carrier”, said the Qantas Group CEO, Vanessa Hudson. She also addressed and mentioned the fact that the airways let their customers down and fell short of their standards when flying resumed after Covid-19. Qantas was aware that the customers were affected by their failure to provide cancellation notifications in a timely manner and are apologetic about it.
She further thanked the ACCC for their cooperation for helping them reach this outcome and compensate affected customers much sooner, compared to if the case had continued in the Federal Court. They aim at making it as quick and seamless as possible.
This compensation plan will affect more than 86,000 customers. Additionally, the airline stated that their online booking system was the main reason for their sales. For which, informing the customers that flights that they were supposed to fly on had been cancelled, would have caused major uncertainty and frustration. It would have also overloaded their phone lines when they were notified of the cancellation directly without being assigned to a replacement flight.
The chair of ACCC, Gina Cass Gottlieb stated before the deal that she wanted Qantas to pay a fine of at least $250 million, which is twice the maximum penalty that is now decided. Regardless of that, she also stated that she was content with the reduced fine as it was a result of an early settlement, Qantas acknowledged the wrongdoings and also a promise to do better moving forward, especially with regard to the operations of its low cost carrier, Jetstar.
This was a shocking and an unacceptable conduct by Qantas which affected many travelling families and businesses. If approved by the federal court, this $100 million penalty will send a strong message to the Australian companies that they must comply with the law. ACCC assures the community that they will take strong actions to make sure that businesses communicate clearly, accurately and honestly with their customers at all times.