Qantas Settles ACCC Case: $100m Fine & $20m To Customers

The Qantas Group has agreed with the Australian Competition and Consumer Commission (ACCC) to resolve court proceedings regarding its flight cancellation processes.

Under the settlement agreed with the ACCC, Qantas will launch a projected $20 million remediation program for impacted passengers. Customer payments will range from $225 to $450. Subject to the approval of the Federal Court of Australia, the airline will pay a $100 million civil penalty.

The ACCC and Qantas will shortly seek approval of the proposed penalty by the Federal Court. However, Qantas intends to commence the remediation program before the Court approval process.

Restoring Confidence In The National Carrier

Qantas Group CEO Vanessa Hudson said: “Today represents another important step forward as we work towards restoring confidence in the national carrier.
“When flying resumed after the COVID shutdown, we recognise Qantas let down customers and fell short of our own standards. We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry. The return to travelling was already stressful for many and we did not deliver enough support for customers and did not have the technology and systems in place to support our people.
“We have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesn’t happen again.
“We thank the ACCC for their cooperation in reaching this outcome, which means we can compensate affected customers much sooner than if the case had continued in the Federal Court. We are focused on making the remediation process as quick and seamless as possible for customers.”

What Was The ACCC Case?

The ACCC has concluded its legal actions against Qantas regarding its flight cancellation practices post-COVID. The focus is on improving the promptness in processing cancellations until the end of August 2023. Additionally, the allegations that Qantas wrongfully accepted payments for services it did not intend to provide have been dropped. All affected customers were offered a choice between a refund or an alternative flight.

Customer remediation program

More than 86,000 customers who booked flights at least two days after the cancellation decision will receive compensation through this program. Qantas will compensate those impacted with $225 for domestic/trans-Tasman flights and $450 for international flights, in addition to any refund or alternative flight already provided.

Customers can access payments through a dedicated online portal that professional services firm Deloitte facilitates and will independently audit. Starting next month, Qantas will email the affected customers with details on how to submit a claim. For more information, visit www.qantasremediation.deloitte.com.au.

Of the affected customers, 94% were traveling on domestic or trans-Tasman routes, and the remaining 6% were on international flights. Qantas offered more than 80% of passengers on domestic services an alternative flight that departed at most three hours later than the scheduled time. Likewise, Qantas offered more than 60% of international service passengers an alternative flight that departed within 12 hours of their original departure time.

Financial Impact

The Group will record the impact of the remediation program and penalty as an expense in the Statutory Income Statement for the year ending 30 June 2024. This expense will appear as an item outside of the Underlying PBT.

The company expects to pay the costs associated with the remediation program and penalty after 30 June 2024. As a result, these costs will not significantly affect Net Debt or Free Cash Flow for FY24. Instead, the financial effects will likely occur in FY25, assuming payment happens in that fiscal year.