Qantas will pay $79 million to settle a case

The Washington Post

Sydney — Qantas Airways has agreed to pay 120 million Australian dollars ($79 million) to settle a lawsuit over the sale of thousands of tickets on already canceled flights, in an attempt to end a reputational crisis that has engulfed the airline.
The fine is the biggest ever for an Australian airline and among the largest globally in the sector, although some Australian banks and casino operators have faced higher penalties.
“We recognize Qantas let down customers and fell short of our own standards,” CEO Vanessa Hudson said in a statement.
The payout, however, would pale against the net profit of 1.47 billion Australian dollars that analysts on average forecast Qantas to report in the year to end-June, according to LSEG data.
The ACCC lawsuit centered on the months after Australia’s border reopened in 2022 following two years of Covid restrictions, and airline cancellations and lost luggage complaints spiked globally amid staffing shortages.
Qantas had argued that it faced similar challenges to airlines around the world, but the ACCC said its actions broke consumer law.
It had said the airline sometimes sold tickets to flights weeks after they were canceled.
The ACCC’s Cass-Gottlieb noted that the settlement included a promise from Qantas not to repeat the conduct.

NEUTRAL

Sydney — In an effort to put an end to the airline’s disastrous reputation, Qantas Airways has agreed to pay 120 million Australian dollars ($79 million) to settle a lawsuit concerning the sale of thousands of tickets on flights that have already been canceled.

Qantas and the Australian Competition and Consumer Commission (ACCC) announced on Monday that the company, rather than defending the lawsuit it had previously vowed to fight, would pay a fine of $100 million and split 20 million Australian dollars among the more than 86,000 customers who purchased tickets on the alleged “ghost flights.”.

The fine is among the highest in the industry globally and the largest ever for an Australian airline, though some Australian banks and casino operators have paid even more.

CEO Vanessa Hudson said in a statement, “We recognize Qantas let down customers and fell short of our own standards.”.

Noting that the court still needs to approve the settlement, Hudson continued, “means we can compensate affected customers much sooner than if the case had continued in the Federal Court.”.

If the judge grants the settlement, it will put an end to a conflict that came to light when consumer surveys revealed a sharp decline in Qantas’s brand value due to an increase in cancellation complaints.

Alan Joyce, Hudson’s long-serving predecessor, announced his retirement in August of last year, following the ACCC’s lawsuit. September saw Hudson take over as CEO.

ACCC Chair Gina Cass-Gottlieb stated in a statement that “this penalty… will send a strong deterrence message to other companies.”.

However, the payout would be insignificant compared to the 1 point 47 billion Australian dollar net profit that analysts, on average, expect Qantas to report in the year ending in June, as per LSEG data.

The airline and regulator said that, in addition to a refund, customers who purchased tickets for nonexistent domestic flights would receive $225 and those with international fares would receive $450.

In 2022, after two years of Covid restrictions, Australia’s border was reopened. At that time, airline cancellations and lost luggage complaints increased worldwide due to staffing shortages. These events were the focus of the ACCC lawsuit.

Qantas contended that its predicaments were comparable to those of airlines globally; however, the ACCC asserted that its conduct violated consumer law. The airline was reported to have occasionally sold tickets for flights that were canceled weeks later.

Cass-Gottlieb of the ACCC pointed out that a pledge from Qantas to refrain from the behavior was part of the settlement.

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