Qantas fined $100 million for dishonest conduct

Australia’s largest airline has been fined $100 million for misleading customers by selling tickets on cancelled flights over a number of years.

Between 21 May, 2021 and 26 August, 2023, Qantas sold tickets on already cancelled flights scheduled between May 2022 and May 2024, impacting 86,597 customers on more than 70,000 flights.

This week a Federal Court judge, Justice Helen Rofe, ordered Qantas to pay a $100 million penalty after the airline agreed with competition watchdog the Australian Competition and Consumer Commission (ACCC) on the cost in May.

The airline was fined $70 million for continuing to sell tickets on cancelled flights over the period and a further $30 million for failing to promptly notify customers of cancelled flights.

The ACCC sued Qantas in the Federal Court over its dishonest conduct and court action began on 31 August 2023.

“This is a substantial penalty, which sets a strong signal to all businesses, big or small, that they will face serious consequences if they mislead their customers,” ACCC chair Gina Cass-Gottlieb said.

“We all know the inconvenience of cancelled flights. When this happens, consumers need to know about the cancellation as soon as possible so they can work out alternative arrangements which suit them.

“Up to about 880,000 consumers were affected by Qantas’ conduct. People had made plans, and may have spent money on other related purchases, relying on the fact that the flight would depart as advertised.

“And the delay in notifying them of the cancellation may have made it more stressful and costly to make alternative arrangements.”

The penalties were imposed after Qantas admitted it had contravened the Australian Consumer Law and agreed to make joint submissions with the ACCC to the court that the penalties were appropriate.

It issued a joint statement with the ACCC in May this year.

“Qantas (ASX: QAN) has admitted that it misled consumers by advertising tickets for tens of thousands of flights it had already decided to cancel, and by cancelling thousands more flights without promptly telling ticket holders of its decision, after court action by the ACCC,” the statement read.

“As part of an agreement announced today, the ACCC and Qantas will ask the Federal Court to impose a penalty of $100 million on Qantas for breaching the Australian Consumer Law.”

On 5 May 2024, Qantas also gave an undertaking to the ACCC that it would pay about $20 million to consumers who purchased tickets on flights the carrier had already decided to cancel, or in some cases who were re-accommodated on those flights after their original flights were cancelled.

Those payments came on top of alternative flights, refunds etc issued to affected consumers by Qantas.

Qantas admitted to the court that some senior managers knew cancelled flights were not immediately removed from sale and some consumers booked tickets for flights that had already been cancelled.

The airline also admitted existing ticket holders were not immediately notified and the ‘Manage Booking’ pages were not promptly updated when flights were cancelled.

On average, tickets for cancelled flights were offered for sale for about 11 days after cancellation. In some cases they were sold for up to 62 days after cancellation.

After legal proceedings against Qantas began, the airline made changes to its operating and scheduling systems to ensure it was no longer engaging in the illegal conduct.

Ms Cass-Gottlieb said the ACCC acknowledged Qantas’ cooperation in resolving the issue at an early stage, and its undertaking to implement a remediation program ahead of the court hearing to finalise this case.

“A large, well-resourced company like Qantas should have had strong operating and compliance programs in place that would have prevented these issues from arising,” she said.

“However, we are pleased that Qantas has made changes to its operating and scheduling, and has undertaken to amend its compliance programs.”

Qantas’ barrister Ruth Higgins apologised to the court on behalf of the airline.

“Qantas is sorry for engaging in the conduct,” she said.

The court also ordered Qantas to pay a contribution to the ACCC’s costs, by consent.

The good news for Qantas is that federal politicians of most persuasions prefer it over any other Australian airline – and they especially love the Chairman’s Lounge.

Figures revealed in the Senate by independent Tasmanian senator Jacqui Lambie, who is urging greater patronage for regional airlines, showed Qantas nabbed 78 per cent of federal MPs’ business last financial year.

Politicians and their staff racked up $25.6 million of the overall $32.7m spent on airlines.

“Anyone would think that the members of the major parties have shares in Qantas because both of them are as bad as each other propping up Qantas,” Senator Lambie said.