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Qantas battles turbulence amid claims of unfair practices and a fiery Senate exchange

There was plenty of anticipation as Qantas CEO Alan Joyce and his executive team faced a Senate inquiry on the cost of living in Australia, and the ensuing fireworks did not disappoint. What followed the acrimonious meeting however was a week to forget for Qantas, with the ACCC also announcing legal action against the airline regarding alleged misdeeds around cancelled flights.

The tension was rather high when Qantas chief Alan Joyce sat down this week to face questions in a Senate hearing about the Flying Kangaroo’s position on a range of matters relating to air fares and performance.

In what became a fraught exchange at times, Joyce was forced to deny that Qantas had been misleading customers on credits and pricing, as well as defend his role in helping to scuttle plans by Qatar Airways to double its capacity in the local market.

Interesting points to emerge from session included more clarity around Qantas credits, namely that the figure touted by Qantas Group publicly has not included credits held by Jetstar or any non-Australian customers.

The roughly $370 million worth of Qantas credits outstanding do not factor in Jetstar, the budget carrier’s CEO Stephanie Tully confirmed, with an extra $100 million or so in credits for Jetstar customers still to be used.

Tully also noted under questioning that the majority of the credits are held by Australian-based travellers, and that most of the outstanding credits were for a ticket price of $100 or less.

Earning the ire of the questioning Senators in particular was Qantas’ inability to reveal specifics as to how much credit is currently being by overseas customers, with the Committee flagging a possible return for Joyce if it ultimately determined the answers given this week were unsatisfactory.

When asked if credits might possibly be extended beyond the current 31 December deadline, Jetstar chief Tully pointed to the fact that the Qantas Group had extended the credit deadline three times already, but when pressed for a definitive response, she suggested that there will “always be circumstances that may lead us to make a different decision about that”.

And how true her words turned out to be, only days later Qantas announced they were scrapping the expiry dates on credits for pandemic-impacted flights altogether, bowing to mounting pressure from the public and the media scrutiny following the terse Senate exchange.

The carrier confirmed that customers with COVID credits can request a cash refund and Jetstar customers can use their COVID vouchers for flights indefinitely.

Meanwhile Qantas CEO Alan Joyce was also forced to defend his carrier’s position regarding a rejected plan by Qatar Airways to double its capacity in Australia.

Joyce confirmed what many had already suspected, that his airline did in fact make representations to the Federal Government to block the Qatar move.

While acknowledging the heat the decision had brought on Qantas, Joyce pointed to the flood of capacity from other international airlines since the Federal Government made its call on “national interests” grounds.

“Since May, we’ve seen Singapore Airlines and China Southern announce they are putting on more capacity…that Qatar was after, so a lot of capacity has been added to the market and…it will bring down air fares quite considerably,” he argued.

“Qatar Airways can still add a lot of capacity to this market the way the bilateral agreements work, they could add bigger aircraft to the cities that they’ve been granted, they could add aircraft and services to cities like Adelaide Darwin, Cairns…there’s nothing stopping them doing that.”

But the rationale held little water with rival Virgin Australia, which was quick to release a statement following Joyce’s justifications.

“Australian consumers are paying on average 50% more today for international flights than they did in 2019.  This is due to a lack of capacity.  Denying Qatar additional flights keeps airfares between Australia and Europe unnecessarily higher than need be and denies the Australian tourism industry over $500 million in economic stimulus,” VA claimed.

“Any suggestion that denying Qatar additional flights was designed to protect Qantas’ medium-to-long term sustainability neglects the fact that blocking Qatar damages the domestic and international competitive position of Virgin Australia in favour of Qantas,” the ariline added.

But the controversy did not end there this week, with the ACCC announcing it will be pursuing Qantas in the Federal Court after alleging the carrier misled consumers around cancelled flights.

The consumer watchdog claimed that more than 8,000 flights scheduled to depart between May and July 2022 had tickets sold via the Qantas website for an average of around two weeks AFTER they were cancelled.

“We allege that Qantas made many of these cancellations for reasons that were within its control, such as network optimisation including in response to shifts in consumer demand, route withdrawals or retention of take-off and landing slots at certain airports,” ACCC Chair Gina Cass-Gottlieb said.

In response, Qantas noted that it was important to bear in mind the “unprecedented upheaval” that the entire aviation sector was going through at the time of the allegations.

“Qantas takes these allegations by the ACCC seriously, we have a long-standing approach to managing cancellations for flights, with a focus on providing customers with rebooking options or refunds, it’s a process that is consistent with common practice at many other airlines,” a spokesperson for Qantas said.

“It’s important to note that the period examined by the ACCC between May and July 2022…all airlines were experiencing well-publicised issues from a very challenging restart, with ongoing border uncertainty, industry wide staff shortages and fleet availability causing a lot of disruption,” the carrier added.

The week culminated in ACCC Chair calling for a hefty fine north of $250 million.

More turbulence to come.

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