Qantas Airways has agreed to pay 120 million Australian dollars to settle a lawsuit over the sale of tickets on already canceled flights, aiming to resolve the reputational crisis that has affected the airline. The company will compensate over 86,000 customers who booked tickets on these “ghost flights” and pay a fine of 100 million dollars instead of defending the lawsuit as previously planned. This settlement is the largest ever for an Australian airline, although some other industries in Australia have faced higher penalties.
Qantas CEO Vanessa Hudson acknowledged that the company failed to meet its own standards and let down customers. The settlement allows for affected customers to be compensated sooner than if the case had continued in court, pending approval from the Federal Court. This resolution comes at a time when Qantas’s brand value declined in consumer surveys due to an increase in complaints about flight cancellations. Following the ACCC’s lawsuit last August, the former CEO Alan Joyce accelerated his retirement, with Hudson taking over in September.
ACCC Chair Gina Cass-Gottlieb stated that the penalty sends a strong message to other companies and serves as a deterrent against similar conduct in the future. Although the payout is significant, it is relatively small compared to the net profit expected for Qantas in the current financial year. Those who purchased tickets for non-existent domestic flights will receive $225, while customers with international fares will receive $450, in addition to a refund from the airline.
The lawsuit focused on the period after Australia’s border reopened in 2022 following Covid restrictions, during which airline cancellations and complaints about lost luggage increased globally due to staffing shortages. Qantas argued that it faced similar challenges as other airlines worldwide, but the ACCC found that its actions violated consumer law by selling tickets for flights that had already been canceled. As part of the settlement, Qantas agreed not to repeat the conduct that led to the lawsuit, ensuring compliance with consumer protection regulations in the future.