Qantas could be facing a fine of hundreds of millions of dollars for a practice that it engaged in on a widespread basis last year…
Australian regulator comes after Qantas’ canceled flight tactics
The Australian Competition & Consumer Commission (ACCC) has just launched an action alleging that Qantas has engaged in false, misleading, or deceptive conduct. The airline is accused of selling tickets on flights that it had already canceled in order to generate more revenue.
The ACCC claims that for more than 8,000 flights scheduled to depart between May and July 2022, Qantas kept selling tickets on its website for an average of more than two weeks, and in some cases for up to 47 days, after canceling flights.
On top of that, for more than 10,000 flights scheduled to depart between May and July 2022, Qantas did not notify existing ticket holders that their flights had been canceled for an average of 18 days, and in some cases for up to 48 days.
For a sense of just how widespread these issues were, roughly 25% of Qantas’ total network was canceled over that period, and these issues impacted 70% of those cancelations. In other words, for about 18% of Qantas’ total flights, the airline either continued to sell tickets for two or more days, or delayed informing existing ticket holders that their flights have been canceled for two or more days.
Here are a couple of examples that are provided:
- For the May 6, 2022, flight QF93 from Melbourne to Los Angeles, passengers were notified of the cancelation two days before departure; one consumer was provided a replacement flight a day before their original departure date, which was communicated only through the Qantas app, leading to $600 AUD in out of pocket expenses
- For the July 29, 2022, flight QF73 from Sydney to San Francisco, Qantas sold 21 tickets after it had canceled the flight, with the last ticket being sold 40 days after the cancelation
Here’s how ACCC Chair Gina Cass-Gottlieb said describes this:
“The ACCC has conducted a detailed investigation into Qantas’ flight cancellation practices. As a result, we have commenced these proceedings alleging that Qantas continued selling tickets for thousands of cancelled flights, likely affecting the travel plans of tens of thousands of people.”
“We allege that Qantas’ conduct in continuing to sell tickets to cancelled flights, and not updating ticketholders about cancelled flights, left customers with less time to make alternative arrangements and may have led to them paying higher prices to fly at a particular time not knowing that flight had already been cancelled.”
“There are vast distances between Australia’s major cities. Reliable air travel is essential for many consumers in Australia who are seeking to visit loved ones, take holidays, grow their businesses or connect with colleagues. Cancelled flights can result in significant financial, logistical and emotional impacts for consumers.”
Regulator seeking massive penalties for Qantas
Okay, you might think the regulator is just trying to fine Qantas some small token amount, as we often see against airlines, but that’s not the case here. Instead, the ACCC has asked a court to fine Qantas “hundreds of millions” of dollars. As the ACCC Chair describes this:
“We are going to seek a penalty that will underline that this is not just to be a cost of doing business, it is to deter conduct of this nature.”
The ACCC wants to fine Qantas “significantly more than” the $125 million AUD fine that automaker Volkswagen was charged in 2019, for violating Australian consumer laws.
Under Australian law, the maximum penalties for a breach of Australian consumer law is the greater of $10 million AUD, three times the total benefits that have been obtained or are reasonably attributable, or 10% of the corporation’s annual turnover.
Qantas’ annual turnover was $19.8 billion AUD during the financial year, so the potential fine here is huge.
My take on this action against Qantas
Qantas’ reputation in Australia has taken a nosedive since the start of the pandemic. While there are aspects of Qantas that are great, I’ve never had much respect for the company’s senior management.
CEO Alan Joyce has for years run the airline in the most cutthroat and greedy way imaginable, with little regard for employees or customers. While I understand he’s running a publicly traded, for-profit company, that doesn’t excuse the level of disregard he has shown for others.
So along those lines, I imagine part of the reason the ACCC is coming after Qantas so hard is because politically it’s popular to go after Qantas right now.
As far as the substance of the action goes, I’m happy to see an airline being held accountable for these kinds of practices. Unfortunately, though, they’re common among so many airlines, so I’m not sure Qantas is necessarily much worse than competitors here, other than the quantity of flights it canceled in mid-2022.
It is indeed outrageous how poorly airlines sometimes communicate flight cancelations, and also how they announce that they’ll cancel a flight, but then continue to sell tickets. If Qantas does face a huge fine, hopefully it starts the process of airlines being a bit more accountable on this front in the future.
Bottom line
Australian regulators are looking at levying a huge fine against Qantas, for how the carrier handled flight cancelations. This not only involves selling tickets on flights that had already been canceled, but also not informing customers of flight cancelations even weeks after intentions to cancel a flight were known.
Regulators are really trying to make an example of Qantas here, and could fine the airline hundreds of millions of dollars. The reality is that Qantas is hardly on its own when it comes to acting this way, though accountability has to start somewhere. I’m curious to see what comes of this case.
What do you make of the ACCC going after Qantas?
Membership is free and takes no more information than commenting as a guest. Earn status points for good contributions, and see fewer ads as your status grows.