Qantas and ACCC reach $120 million settlement on airline selling cancelled flights

• In short: Qantas will pay a $100 million penalty for misleading customers by selling tickets to flights that had already been cancelled.
• Affected Qantas domestic customers will receive a payment of $225 and international ticketholders $450 as compensation, on top of any remedies these customers have already received.
• What's next? The Federal Court needs to approve the deal, and payments are not expected to be made until next financial year, after June 30.

Qantas has reached an agreement with the Australian Competition and Consumer Commission (ACCC) to settle a lawsuit against the airline for selling seats on flights that had already been cancelled.

Under the settlement, Qantas will institute a remediation program for affected passengers, with payments ranging from $225 for affected domestic customers to $450 for international customers, which are expected to total about $20 million.

"It's expected to be around 87,000 consumers, who were the ones who were sold tickets on flights that Qantas had already decided to cancel," ACCC chair Gina Cass-Gottlieb told ABC News.

The ACCC said these payments are additional to any remedies already offered by Qantas, such as alternative flights or refunds.

Subject to the approval of the Federal Court of Australia, Qantas will also pay a $100 million civil penalty to the federal government for breaching the Australian Consumer Law.

In a statement announcing the settlement, Ms Cass-Gottlieb described the airline's conduct as "egregious and unacceptable".

Given the circumstances and the inconvenience and loss incurred by many customers as a result of Qantas' failures, Associate Professor Katherine Kemp from UNSW's Faculty of Law and Justice, said the penalty could have been bigger.

"It is a significant penalty but I think Qantas is, in fact, fortunate in this case that it's not a much bigger penalty," she told ABC News.

"This penalty, that's been proposed at least by the ACCC and Qantas, will take into account Qantas' cooperation on this and so there may be a significant discount for that. But the ACCC was originally seeking a much higher penalty than this."

Dr Kemp said there is still a chance the Federal Court may reject the proposed settlement amount and impose a larger fine.

"So, most of the time, we see that the Federal Court makes an order for the same or similar penalty. But there have been cases in the past, including the very high profile case against Volkswagen, where there was a very different and much larger penalty imposed by the Federal Court."

Qantas promises 'quick and seamless' payments, next financial year

Qantas said it intends to commence the remediation program in advance of the court approval process and will recognise the costs as an expense in its full-year accounts, although the money for the fine and remediation is not expected to be paid out until next financial year, after June 30.

Qantas chief executive Vanessa Hudson said the settlement means that affected customers are likely to get their money much more quickly than if a court case had proceeded.

"We are focused on making the remediation process as quick and seamless as possible for customers," she said in a statement.

Qantas said, as part of the settlement, the ACCC is no longer proceeding with claims that Qantas wrongfully accepted payment for a service it did not, and had no intention of, providing.

"We absolutely have maintained and continue that we did not take fees for no service, that we would not take fees for no service, and that the ACCC is no longer proceeding with this part of its claim," Ms Hudson told reporters.

"A core part of the promise to consumers that if they buy a ticket on Qantas, and if there is a change or a cancellation, our promise to those customers is that we will provide them with an alternative flight or we will provide them a refund.

However, Dr Kemp said just because the ACCC has chosen to settle rather than proceeding to trial does not mean that Qantas did not take fares for no service.

"If this matter had gone to trial — bearing in mind that Qantas was still supplying flights and receiving fees for them, in some cases, where those flights had been cancelled more than two weeks earlier — it is possible that the court would have found that Qantas had not intended to provide that service in exchange for the fee," she said.

'Serious' breach of consumer law

For its part, the ACCC said Qantas has admitted misleading consumers by advertising tickets for tens of thousands of flights it had already decided to cancel, and by cancelling thousands more flights without promptly telling ticketholders.

Ms Cass-Gottlieb said it sends "an important message to companies across the economy that breaches of the Australian Consumer Law are serious and will result in material fines."

However, consumer group Choice said the federal government needs to act to ensure that customers have a clear legal entitlement to compensation for cancelled flights.

Choice's director of campaigns Rosie Thomas said consumers shouldn't need regulator action to receive compensation when it's owed.

"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 said.

"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."