Qantas to pay $20m to ghost flight customers and $100m fine to settle ACCC court action

Qantas will pay up to $450 to tens of thousands of customers stung by the embattled airline’s so-called “ghost flights” scandal, plus a $100 million fine for what the consumer watchdog branded “egregious and unacceptable” conduct.

The Australian Competition and Consumer Commission has been chasing Qantas through the Federal Court over claims it sold tickets on more than 8000 flights between May and June in 2022 that had already been cancelled.

In some instances, it was claimed tickets on the flights were still being sold for up to 47 days after they were cancelled, while some passengers were only notified of the cancellation two days before the flight.

Qantas on Monday said it had agreed to $20m in remediation payments for 86,000 customers and a $100m civil penalty, which will need the Federal Court’s seal of approval.

The fine is less than half the record penalty of more than $250m the ACCC had been pursuing.

Customers impacted by the cancellations will receive $225 for domestic and trans-Tasman flights and $450 for international flights.

Qantas had previously conceded its booking system had failed customers but denied it breached the law, saying customers when purchasing a ticket were buying a “bundle of rights” rather than a “particular flight”.

“Both in offering those airfares for sale, and in its contracts with consumers, Qantas states explicitly that it does not guarantee flight times or flight schedules,” it had stated in defence documents filed with the court late last year.

Qantas chief executive Vanessa Hudson said she hoped the settlement with the ACCC represented another step forward as the national carrier works to regain the travelling public’s trust following a raft of scandals that has left the airline’s reputation in tatters.

They included a botched COVID-19 credits program, the illegal sacking of 1700 ground workers during the COVID-19 crisis, a generous golden handshake exit for former chief executive Alan Joyce and a post-pandemic restart of domestic and international services marred by poor customer service, lost luggage, flight delays and myriad cancellations.

“When flying resumed after the COVID shutdown, we recognise Qantas let down customers and fell short of our own standards,” Ms Hudson said.

“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.“

Under the terms of the agreement, Qantas said it would now notify customers of cancelled flights as soon as practicable, and no more than 48 hours from deciding to cancel the flight.

It will also stop selling cancelled flights as soon as practicable, and in any event within 24 hours of its decision to cancel. The undertaking also applies to its low-cost subsidiary, Jetstar.

Qantas will also review its consumer compliance program and appoint independent auditors who will monitor compliance with the undertaking and provide reports to the Qantas board and the ACCC.

ACCC chair Gina Cass-Gottlieb said the agreement secured an admissions by Qantas that it misled customers.

“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,” Ms Gina Cass-Gottlieb said.

“We expect that this penalty, if accepted by the court, will send a strong deterrence message to other companies.

“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.”

Consumer group Choice described the admission and the penalty as a “significant” result.

“The proposed settlement sends a very clear message to all airlines and travel service providers that misleading consumers about cancellations does not fly,” said director of campaigns and communications Rosie Thomas.

“We’ve heard from countless consumers about having to fight tooth and nail to receive refunds or compensation from airlines for delayed or cancelled flights.

“Consumers should not need regulator action to receive compensation when it’s owed.”

Choice has called for a new travel and airline Ombudsman scheme and stronger rights to refunds and compensation for cancelled flights.