The Qantas Group and Australian Competition and Consumer Commission Forge Agreement to Settle Disputes Over ...

Monday, May 6, 2024

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The Qantas Group unveiled an accord with the Australian Competition and Consumer Commission (ACCC) aimed at resolving ongoing legal disputes concerning flight cancellation procedures.

As part of the settlement with the ACCC, Qantas commits to launching a comprehensive $20 million compensation initiative for affected passengers. The compensation amounts will vary between $225 and $450 per customer. Additionally, pending the Federal Court of Australia’s endorsement, Qantas will remit a civil penalty totaling $100 million.

Both the ACCC and Qantas will imminently petition the Federal Court to ratify the proposed penalty. Nevertheless, Qantas plans to initiate the compensation program prior to formal court approval.

Qantas Group CEO Vanessa Hudson said: “Today represents another important step forward as we work towards restoring confidence in the national carrier.

“When flying resumed after the COVID shutdown, we recognise Qantas let down customers and fell short of our 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. 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.

“We have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesn’t happen again.

“We thank the ACCC for their cooperation in reaching this outcome, which means we can compensate affected customers much sooner than if the case had continued in the Federal Court. We are focused on making the remediation process as quick and seamless as possible for customers.”

The ACCC’s lawsuit concerning flight cancellations post-COVID reopening, extended until August 2023, emphasized the need for prompt cancellation processing.

Claims against Qantas for wrongful payment acceptance, alleging service receipt without intent to provide, have been dropped.

All affected customers were offered refunds or alternative flights.

Customer Compensation Program

Over 86,000 customers, booking flights after the cancellation decision by two or more days, will receive compensation. Domestic/trans-Tasman travelers will get $225, international flyers $450, atop any prior refunds or alternative flight offers.

Payments, managed by Deloitte via an online portal, will undergo independent audits. Impacted customers will be notified via email next month.

Of affected customers, 94% flew domestic/trans-Tasman routes; 80% received alternative flights within three hours (domestic) or within 12 hours (international) of the original schedule.

Financial Impact

Remediation costs and penalties will be expensed in the Group’s 2024 Statutory Income Statement, separate from Underlying PBT.

Cash outflow, expected post-June 30, 2024, won’t significantly affect FY24 Net Debt or Free Cash Flow but will occur in FY25, assuming payment in that fiscal year.