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Qantas concedes it misrepresented itself to travellers on ‘ghost flights’

After launching Federal Court action against Qantas last year, the ACCC this week reached an outcome it feels marks a "milestone" moment for Australian Consumer Law. The consumer watchdog smelled a rat around the number of bookings being taken on flights that were later cancelled. Qantas has now admitted to misleading its customers. ADAM BISHOP has the full story.

It appears the ACCC has caught its most wanted company.

Yes, Qantas has given up its fight to contest accusations of misleading customers over tickets sold on cancelled flights, referred to by many in the wake of the scandal as ‘ghost flights’.

In a statement issued this morning, the carrier said it now recognised it has let down customers and fallen short of its own standards.

“We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry,” Qantas Group CEO Vanessa Hudson said.

“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.

“Today represents another important step forward as we work towards restoring confidence in the national carrier,” she added.

Qantas also confirmed it had now updated its processes and is investing in new technology across the business to ensure the issue of selling tickets on cancelled flights is avoided as much as possible.

The upshot of the admission will see Qantas fork out $20 million to impacted customers as part of a remediation program, with payments ranging from $225 to $450.

Negotiations with the ACCC (subject to the approval of the Federal Court of Australia) will also see the airline pay a $100 million civil penalty.

More than 86,000 customers who made a booking on a flight two or more days after the cancellation decision had been made will be compensated as part of the program.

Payments will be available through a dedicated online portal facilitated by Deloitte, with Qantas to notify impacted customers via email from next month with details about how they can lodge a claim.

Commenting on the agreement struck this morning, ACCC Chair, Gina Cass-Gottlieb, said she was pleased to have secured the admissions by Qantas that it misled its customers, suggesting the size of the proposed penalty is an important milestone in enforcing the Australian Consumer Law.

“Qantas’ conduct was egregious and unacceptable,” Cass-Gottlieb said.

“Many consumers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled.

“We expect that this penalty, if accepted by the Court, will send a strong deterrence message to other companies, and importantly, it demonstrates that we take action to ensure that companies operating in Australia communicate clearly, accurately, and honestly with their customers at all times.

“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.”

The ACCC launched Federal Court action against Qantas late last year, alleging that between 21 May 2021 and 07 July 2022, Qantas advertised tickets for more than 8,000 cancelled flights.

It was also alleged that for more than 10,000 flights scheduled to depart in May to July 2022, Qantas did not promptly notify existing ticketholders that their flights had been cancelled.

Qantas has now admitted that its misconduct continued from 21 May 2021 until 26 August 2023, affecting tens of thousands of flights scheduled to depart between 1 May 2022 and 10 May 2024.

The Court will determine the penalty after a hearing on a date to be fixed.

Consumer advocate Choice also weighed in on the announcement today, suggesting that while the compensation of thousands of Qantas customers is clearly a win for travellers, it should be the norm and not a one-off victory.

“Consumers should not need regulator action to receive compensation when it’s owed,” Director of Campaigns and Communications, Rosie Thomas, argued.

“Choice’s 2023 survey of almost 9,000 people found that of those who pursued a refund or compensation for a cancelled flight, one in five had to wait over six months,” she added.

Using Qantas’ admission today as a platform, Choice reiterated its call for the establishment of a new travel and airline ombuds scheme and stronger rights to refunds and compensation for cancelled flights.

“We look forward to the Federal Government’s upcoming Aviation White Paper to set out a clear plan to bring Australia’s airline consumer protection framework in line with comparable international jurisdictions,” Thomas said.

When the accusations were first put to Qantas, it vigorously refuted any suggestion of improper sales practices.

However a lot has changed in the intervening months, with new CEO Vanessa Hudson determined to turn around the carrier’s public image, with the latest development representing just another small step along the way to full brand rehabilitation.

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