The Federal Court has confirmed a $100 million penalty in relation to its so-called "ghost flights" scandal.
The court ordered the airline to pay $100 million for misleading consumers by offering and selling tickets for flights it had already decided to cancel, and for failing to promptly inform existing ticket holders of its decision.
These penalties were imposed after Qantas admitted to contravening the Australian Consumer Law (ACL) and agreed to make joint submissions with the ACCC to the court, asserting that penalties of $100 million were appropriate to deter Qantas and other businesses from breaching the ACL in the future, while recognizing Qantas’ cooperation in resolving the proceedings at an early stage.
“This is a substantial penalty that sends 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.
On May 5, in addition to these penalties, Qantas undertook to pay about $20 million to consumers who purchased tickets for flights that Qantas had already decided to cancel, or in some cases, for those who were re-accommodated on those flights after their original flights were canceled.
These payments are in addition to any remedies these consumers have already received from Qantas, such as alternative flights or refunds.
“We all know the inconvenience of canceled flights. When this happens, consumers need to be informed of the cancellation as soon as possible, so they can make alternative arrangements that suit them.”
“Up to about 880,000 consumers were affected by Qantas’ conduct. People had made plans and may have spent money on related purchases, relying on the fact that the flight would depart as advertised. The delay in notifying them of the cancellation may have made it more stressful and costly to make alternative arrangements,” Ms. Cass-Gottlieb said.
In Tuesday’s statement, Qantas admitted that senior managers responsible for different aspects of Qantas’ systems and operations were aware that canceled flights were not immediately removed from sale; that some consumers booked tickets for flights that had already been canceled; that existing ticketholders were not promptly notified; and that the "Manage Booking" pages were not updated in a timely manner when flights were canceled.
Qantas also acknowledged that it benefited from this conduct by obtaining revenue from consumers who might have chosen a cheaper Qantas flight or a flight with another carrier had they known their chosen flight had already been canceled.
"Qantas also benefited by retaining revenue from consumers who were less likely to change carriers when they were eventually notified that their flight had been canceled. Additionally, by delaying fixes to its systems, Qantas saved the costs of implementing those changes at an earlier point in time,” the ACCC stated.
Qantas shares ended up 1.13% at $7.13 on the ASX on Tuesday.
