 "Qantas planes are seen at a domestic terminal at Sydney Airport in Sydney, Australia, November 16, 2020. File Image/Reuters")
Months after Qantas Airways, revered as the “Spirit of Australia,” found itself entangled in a massive scandal involving fake flights, recent court documents reveal that national carrier had misled nearly a million passengers.
The controversy, which has led to significant financial penalties, management changes, and legal consequences, revolves around the airline selling tickets for thousands of flights that had already been cancelled.
What was the scandal?
According to court filings, Qantas sold tickets for 71,000 flights scheduled between May 2022 and May 2024, despite knowing these flights were cancelled. Over 884,000 passengers were not informed that they had booked tickets on flights that would never take off.
The Australian Competition and Consumer Commission (ACCC) revealed that Qantas continued to sell these tickets for an average of 11 days after deciding to cancel the flights. For some flights, the notification delay reached as long as 18 days.
Qantas settled the lawsuit in May 2024, agreeing to pay A$120 million (approximately $82 million) in fines and compensation. This settlement includes A$100 million (£52.7 million) in penalties and an additional A$20 million (£10.5 million) in compensation to 87,000 victims of its “ghost flights” policy.
The case was initially brought by the ACCC, which sought a record penalty of over A$250 million.
Vanessa Hudson, Qantas’ CEO since September 2023, acknowledged, “We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner, and we are sincerely sorry.”
Who at Qantas was responsible for the scandal?
Court documents also reveal that senior managers at Qantas were aware of the systemic issues surrounding flight cancellations and the misleading sale of tickets. However, no single individual was found to have had complete knowledge of the scope of the problem.
Former CEO Alan Joyce, who stepped down prematurely amidst the scandal, faced scrutiny over his leadership during the critical period when Qantas’ failings came to light.
The airline’s systems, at the time, did not promptly remove cancelled flights from sale, which contributed to the widespread sale of tickets for non-existent flights.
“Qantas was aware of the way in which its system operated,” read the court filing.
In response to the legal actions, Qantas has since updated its processes and invested in new technology aimed at preventing similar issues from occurring again. Hudson said that these changes would restore public confidence, stating, “We have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesn’t happen again.”
What was the financial fallout for Qantas?
The settlement marks a significant blow to the airline both financially and reputationally. Qantas was accused of selling over 8,000 tickets on cancelled flights between May and June 2022 alone.
As the ACCC investigation concluded, Qantas admitted that it had indeed engaged in such practices between May 2021 and August 2023, a period that also coincided with the height of the COVID-19 pandemic.
The ACCC’s chair, Gina Cass-Gottlieb, described the airline’s conduct as “egregious and unacceptable.” She further stated, “Qantas’s conduct was egregious and unacceptable. Many consumers will have made holiday, business, and travel plans after booking on a phantom flight that had been cancelled.”
The settlement agreement, which is subject to approval by the Federal Court of Australia, ensures that 86,000 affected customers will receive compensation.
Domestic travellers will be awarded A$225 each, while international travellers will receive A$450. These payments will be made in addition to any refunds or alternative flights that had already been provided.
The legal action forced Qantas to take responsibility for its actions, and Hudson admitted the company’s shortcomings. She acknowledged the company’s failings following the COVID shutdown, stating, “The return to travelling was already stressful for many, and we did not deliver enough support for customers.”
How has this scandal affected Qantas’ reputation?
The ghost-flight scandal is just one of several issues that have plagued Qantas over the past few years. The airline faced harsh criticism for its skyrocketing ticket prices, inadequate customer service, and the controversial firing of 1,700 ground staff during the pandemic.
In 2023, despite the controversy, Qantas reported a profit of $1.1 billion, demonstrating its ability to rebound financially post-COVID, even while facing severe reputational damage.
Qantas had previously defended its practice of selling tickets for cancelled flights, arguing that customers purchased a “bundle of rights” and that the airline was committed to doing its best to get passengers to their destinations on time.
However, this defence crumbled in the face of overwhelming evidence from the ACCC investigation.
The airline’s long-held reputation for reliability and customer service has taken a major hit. Qantas has been working to address the damage done, with Hudson stating, “Today represents another important step forward as we work towards restoring confidence in the national carrier.”
What’s next for Qantas?
With the settlement in place and the compensation program ready to roll out, Qantas aims to put this scandal behind it. The airline has committed to improving its systems and customer service to prevent future incidents.
As part of the settlement, Qantas has avoided further legal challenges by agreeing to expedite its compensation payments. Cass-Gottlieb of the ACCC noted, “In the interest of getting an early settlement and the additional payments and compensation to customers, we are no longer taking forward a requirement that they admit to a contravention of selling the service and receiving payment with no intention of providing the service.”
Cass-Gottlieb stated, “This A$100 million penalty, if accepted by the Federal Court, will send a strong message to Australian companies that they must comply with the Australian Consumer Law.”
With inputs from agencies