Australia’s Qantas Airways Ltd agreed to pay A$120 million (US$79 million) to settle a regulator 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 company is to split A$20 million between more than 86,000 customers who booked tickets on the so-called “ghost flights” and pay an A$100 million fine instead of defending the lawsuit that it had previously vowed to fight, Qantas and the Australian Competition and Consumer Commission (ACCC) said on Monday.
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 for breaches of the law.
Photo: AP
“We recognize Qantas let down customers and fell short of our own standards,” Qantas chief executive officer Vanessa Hudson said in a statement.
The settlement “means we can compensate affected customers much sooner than if the case had continued in the Federal Court,” Hudson said, who started her role in September last year, adding that the court still must sign off on the settlement.
If the court approves, the settlement would resolve a dispute that had featured prominently at a time when Qantas’s brand value tanked in consumer surveys amid a spike in complaints about cancellations. After the ACCC filed its lawsuit in August last year, Hudson’s long-serving predecessor, Alan Joyce, brought forward his retirement.
“This penalty ... will send a strong deterrence message to other companies,” ACCC Chair Gina Cass-Gottlieb said in a statement.
However, the payout would pale against the A$1.47 billion net profit that analysts on average forecast Qantas to report in the year to the end of June, London Stock Exchange Group data showed.
People who bought tickets on non-existent domestic flights would get A$225 and people with international fares would get A$450, on top of a refund, the airline and regulator said.
Qantas is still waiting to learn how much it must pay nearly 1,700 ground handling staff it sacked in 2020 after a court found the job cuts were illegal since they were intended to stop industrial action.
The ACCC lawsuit centered on the months after Australia’s border reopened in 2022 following two years of COVID-19 restrictions, and airline cancelations and lost luggage complaints spiked globally amid staffing shortages.
Qantas had said that it faced similar challenges to airlines around the world, but the ACCC said its actions broke consumer law, as it sometimes sold tickets to flights weeks after they were canceled.
Cass-Gottlieb said that the settlement included a promise from Qantas not to repeat the conduct.
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