Qantas is to pay a penalty of A$100 million (£53 million) after it admitted misleading consumers by advertising tickets for tens of thousands of post-Covid flights it had already decided to cancel.
The airline also cancelled thousands more flights without promptly telling ticket holders of its decision.
In a settlement agreed with the Australian Competition and Consumer Commission (ACCC), Qantas is to offer a projected A$20 million to compensate more than 86,000 affected customers. Payments will range from A$225 to A$450.
The ACCC and Qantas will ask Australia’s Federal Court to impose the A$100 million penalty on the carrier for breaching Australian consumer law as part of a deal announced on Monday.
The agreement resolves court proceedings in relation to flight cancellation processes.
The ACCC’s case related to flight cancellation practices following the restart of operations post-Covid, which was extended through to the end of August 2023, when steps were taken to ensure that processing of cancellation decisions occurred promptly, according to Qantas.
ACCC chair Gina Cass-Gottlieb said: “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.
“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.”
Qantas Group chief executive Vanessa Hudson said: “Today represents another important step forward as we work towards restoring confidence in the national carrier.
“When flying resumed after the Covid 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.
“We have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesn’t happen again.”
She added: “We thank the ACCC for their co-operation 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.”