ACCC takes Qantas to court over 10,000 flight cancellations in 2022

The public image of Qantas Airways (ASX: QAN) is about to take another hammering after the consumer watchdog launched legal action alleging the airline knowingly disrupted the travel plans of thousands of passengers in 2022 after selling tickets for flights it had already cancelled.

The Australian Competition and Consumer Commission (ACCC) has filed a Federal Court claim alleging Qantas engaged in false, misleading or deceptive conduct by advertising tickets for more than 8,000 cancelled flights that were scheduled between May and July last year.

Qantas, which the ACCC says has been the source of more consumer complaints recently than any other business, is alleged to have kept selling tickets on its website for an average of more than two weeks, and in some cases for up to 47 days, after the cancellations.

The ACCC further alleges that, for more than 10,000 flights scheduled to depart in May to July 2022, Qantas did not notify existing ticketholders that their flights had been cancelled for an average of about 18 days, and in some cases for up to 48 days.

The consumer watchdog is claiming that, for about 70 per cent of cancelled flights, Qantas either continued to sell tickets for the flights on its website for two days or more, or delayed informing existing ticketholders that their flight was cancelled for two days or more, or both.

The ACCC’s Federal Court action comes on the heels of a tough month for Qantas which culminated in CEO Alan Joyce this week having to defend his annual salary package during a hostile grilling by a Senate committee on the cost of living.

Qantas, which last week reported a $1.7 billion profit for FY23, was also hit by a class action over its refund policy for cancelled flights during the pandemic.

However, in response to public backlash Qantas today announced it will remove the expiry date on COVID travel credits that were due to run out at the end of this year. Qantas says customers with COVID credits can request a cash refund, and Jetstar customers can use their COVID vouchers for flights, indefinitely.

ACCC chair Gina Cass-Gottlieb says the Federal Court action is the result of a detailed investigation into the flight cancellation practices of Qantas.

“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,” Cass-Gottlieb says.

“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.”

According to the ACCC, Qantas cancelled almost one in four flights from May to July 2022, or about 15,000 of 66,000 domestic and international flights.

In one example, the ACCC says Qantas sold 21 tickets for QF73 from Sydney to San Francisco, which was scheduled to depart on 29 July 2022, after it had cancelled the flight, with the last ticket being sold 40 days after cancellation.

While airlines are permitted to cancel flights due to unforeseeable circumstances, such as bad weather, aircraft defects and delays from previous flights, the ACCC is alleging that the cancellations in question were due to other factors.

“We allege that Qantas made many of these cancellations for reasons that were within its control, such as network optimisation including in response to shifts in consumer demand, route withdrawals or retention of take-off and landing slots at certain airports,” Cass-Gottlieb says.

“However, this case does not involve any alleged breach in relation to the actual cancellation of flights, but rather relates to Qantas’ conduct after it had cancelled the flights.”

The ACCC is seeking penalties, injunctions, declarations and costs against Qantas, a company that it says accounts for more complaints than any other business.

Last year alone, the ACCC says it received more than 1,300 complaints about Qantas cancellations, accounting for half of all complaints about Qantas reported to the ACCC.