Australia’s Qantas pays $79 million to settle ‘ghost flight’ case

Australia’s Qantas pays $79 million to settle ‘ghost flight’ case

Qantas Airways has agreed to pay 120 million Australian dollars ($79 million) to settle a lawsuit over the sale of thousands of tickets on canceled flights, in an effort to end a reputational crisis that has plagued the airline.

The company will split 20 million Australian dollars between more than 86,000 customers who booked tickets on the so-called “ghost flights” and pay a fine of 100 million instead of defending the lawsuit it had previously pledged to fight, Qantas and the Australian Competition and Consumer Commission (ACCC). said on Monday.

The fine is the largest for an Australian airline and among the largest worldwide in the sector, although some Australian banks and casino operators have faced higher penalties.

“We recognize Qantas has let customers down and not lived up to our own standards,” CEO Vanessa Hudson said in a statement.

The settlement “means we can compensate affected customers sooner than if the case had proceeded in Federal Court,” Hudson added, noting the court must still sign off on the settlement.

If the court approves, the settlement will resolve a dispute that has featured prominently at a time when Qantas’ brand value has slumped in consumer surveys amid rising complaints about cancellations.

After the ACCC filed its suit last August, Hudson’s long-serving predecessor, Alan Joyce, tendered his retirement. Hudson became CEO in September.

“This penalty … will send a strong deterrent message to other companies,” ACCC Chairwoman Gina Cass-Gottlieb said in a statement.

The payout, however, will change compared to the net profit of 1.47 billion Australian dollars that analysts on average had predicted Qantas would report in the year to the end of June, according to LSEG data.

People who bought tickets on non-existent domestic flights will get $225 and people on international fares will get $450, in addition to refunds, the airlines and regulators said.

The ACCC’s claims focus on the months after Australia’s borders reopen in 2022 following two years of Covid restrictions, and airline cancellations and lost baggage complaints have risen globally amid staff shortages.

Qantas argued that it faced similar challenges to airlines around the world, but the ACCC said its actions breached consumer law. It said the airline sometimes sold tickets to flights weeks after they were cancelled.

The ACCC’s Cass-Gottlieb stated that the settlement included a promise from Qantas not to repeat the conduct.