Qantas fined A$100m for selling seats on cancelled flights

Flagship Australian airline Qantas will take a major financial hit after it sold seats on cancelled flights.

Qantas has been fined $A100 million ($109m) for misleading customers on flight bookings over several years, with a court hearing senior managers were partly aware of the practice.

The Australian Competition and Consumer Commission (ACCC) sued the company in the Federal Court over dishonest conduct relating to the sale of tickets on cancelled flights.

The national carrier admitted misleading and deceiving customers by continuing to sell tickets for flights it had already cancelled, and delayed notifying booked customers that their flights were no longer going ahead.

Justice Helen Rofe on Tuesday formally ordered Qantas to pay a A$100m penalty.

Tickets were sold on already cancelled flights between May 21, 2021, and August 26, 2023, for flights scheduled between May 1, 2022, and May 10, 2024, impacting 86,597 customers on more than 70,000 flights.

Seats continued to be sold for about 11 days to up to 62 days after Qantas had decided to cancel the flight while it took the company about 11 days to up to 67 days for booked customers to be notified of their flight’s cancellation, the court was told.

Senior airline managers knew about different aspects of the issue, including cancelled flights were not removed from booking pages or that customers could still book those flights, ACCC barrister Christopher Caleo said.

But no single manager was aware of the issue in totality.

“Qantas was aware deficiencies in their systems,” Caleo said.

“Despite their awareness, it persisted over an extended period of time and affected a large number of consumers.”

Qantas was fined A$70m for the continued sale of tickets on cancelled flights, which the ACCC said was likely to have caused the greatest harm.

Failure to promptly notify customers of cancelled flights landed Qantas an A$30m fine.

Given the size of Qantas – Australia’s largest carrier, accounting for 38% of market share – a significant penalty was required to achieve deterrence, Caleo said.

“A penalty must send a signal to other companies in Australia, particularly to other large companies, that contraventions of Australian consumer law will not be tolerated,” he said.

“It must sting and must not be an acceptable cost for Qantas for failing to have systems in place.”

The carrier expressed its contrition over its conduct in court on Tuesday.

“Qantas is sorry for engaging in the conduct,” barrister Ruth Higgins said.

More than 86,000 impacted customers also received A$20m in compensation, with domestic customers receiving A$225 ($248) and international customers getting A$450.

Qantas said it has made changes to its systems and agreed to notify customers of cancelled flights no longer than 48 hours from cancelling a flight and stop selling tickets for those journeys within 24 hours.

The undertaking also applies to subsidiary Jetstar.

“The fact that Qantas made these changes makes it clear that Qantas wants to avoid the matter from occurring again,” Higgins said.

The carrier faced maximum fines of A$4.98 billion to A$7.58b for the contraventions.

- AAP