In agreeing to pay a $100m penalty and compensate tens of thousands of customers to the tune of $20m for selling them tickets on already-cancelled flights, Qantas has abandoned its farcical claim that as an airline it doesn’t sell seats on a specific service, but rather a “bundle of rights”.
For new CEO Vanessa Hudson – who stepped into the top job eight months ago after allegations aired in the consumer watchdog’s legal action against Qantas hastened former boss Alan Joyce’s retirement – the landmark settlement is a retreat from her predecessor’s confrontational style that many argued had trashed the airline’s brand.
While the move away from the “bundle of rights” argument – where Qantas claimed it did not sell customers tickets to any particular flight, but rather a “bundle of rights” that includes alternative options in the event of cancellations – is a positive step, the airline seems keen to deliver the headline of their concession without delving into the details of the settlement.
For an airline that knows how to choreograph a media opportunity when there’s good news to trumpet, Hudson’s telephone-only conference call to address questions on Monday speaks volumes.
The Australian Competition and Consumer Commission (ACCC) case had initially been filed based on cancellation data during a May-July 2022 monitoring period – a window when 15,000 out of 66,000 Qantas services were cancelled – alleging it had advertised and sold tickets for more than 8,000 flights that it had already cancelled in its internal system, while taking up to 47 days to notify affected customers.
However, Qantas acknowledged on Monday that through working with the ACCC on a settlement, it had unearthed thousands more instances of customers who were sold tickets to flights that had already been cancelled.
Qantas has agreed to make compensation payments of between $225 and $450 to 86,597 consumers who, between 21 May 2021 and 26 August 2023, booked or were re‑accommodated on a domestic or international flights after a decision to cancel the flight had already been made.
Both parties agreed the issue had been caused by a failure of Qantas’ internal systems, and this failure to invest in new technological improvements and customer improvements despite delivering healthy profits and treats for shareholders has been an imbalance that Hudson has already spoken about addressing.
Notably, a compromise saw the ACCC agree to drop its allegation that Qantas had charged fees for no service, while the airline dropped its “bundle of rights” defence.
“They are no longer going forward to defend on that basis. They are accepting and admitting that they misled customers by selling tickets represented on the basis of the continuation of a flight at a particular time,” ACCC chair Gina Cass-Gottlieb said.
Qantas has also promised to stop selling cancelled flights within 24 hours of its decision to cancel, as well as to notify customers of cancelled flights no more than 48 hours from deciding to cancel the flight, in commitments that also apply to its budget carrier Jetstar.
Does this mean that travellers can now have more confidence in their booking? And will the warning that date and time of departure do not form part of a customer’s contract with the airline now vanish from Qantas’ booking websites?
Hudson, when pressed on this, could make no guarantees.
“Even on the ACCC’s website, it notes that airlines cannot guarantee specific flight times on specific dates,” she said.
The total amount of the settlement may have left some of Qantas’ fiercest critics wondering if the airline got off lightly.
Initially Cass-Gottlieb had been seeking $250m in penalties but on Monday said she was satisfied with the lesser penalty because it secured an early settlement, admissions of misconduct and the commitments to improve in the future.
Qantas’ strong financial position of late – in February Hudson handed down a $1.25bn half-year pre-tax profit and rewarded shareholders with a $400m buyback, after a record $2.47bn full-year profit in 2022-23 – suggests the airline can absorb the $120m hit.
In cutting a deal with the ACCC – which has identified Qantas as the most complained about company for two years running – Hudson has saved the airline potentially hundreds of millions of dollars and spared it from a protracted legal dispute with negative coverage. (The cost of the alternative, Joyce-era approach will play out shortly when Qantas learns how much compensation – expected to exceed $100m – it must pay over the illegal outsourcing of 1,700 ground handlers that it fought tooth and nail to overturn.)
Despite this, the settlement is a clear success for the ACCC.
Its allegations set the public debate about Qantas’ dominance into overdrive, triggered talk about increasing competition and consumer protections in aviation, with discussion of a mandatory cash compensation scheme for delays – something Qantas fiercely opposes – raised in Canberra ahead of the upcoming aviation white paper.
To this end, even if they’re not one of the 86,597 customers set to receive payments from Qantas, the travelling Australian public are also set to reap the rewards of the ACCC’s case.
