The Qantas Group has today announced an agreement with the Australian Competition and Consumer Commission (ACCC) to resolve court proceedings in relation to flight cancellation processes.
Under the settlement agreed with the ACCC, Qantas will commence a projected $20 million remediation program for impacted passengers, with payments to customers ranging from $225 to $450, and subject to the approval of the Federal Court of Australia, 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 in advance of the Court approval process.
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.”
All affected customers were given the option of a refund or an alternate flight.
The ACCC’s case related to flight cancellation practices following the restart of operations post-COVID, which has been extended through to the end of August 2023, when steps were taken to ensure that processing of cancellation decisions occurred promptly.
The ACCC is no longer proceeding with its claims against Qantas about wrongful acceptance of payment, including any allegation that Qantas received payment for a service it did not, and had no intention of, providing.
TWU says ‘what about illegally sacked Qantas workers’
While the TWU welcomed the settlement it says it is another reminder for illegally sacked Qantas workers sacked during COVID that they’re at the bottom of the pile.
“This is good news for passengers misled by the appalling conduct of Qantas,” TWU National Secretary Michael Kaine said. “Customers have suffered multiple times from being ripped off, dealing with flight cancellations, delays and lost baggage and even being blamed for airport chaos by Alan Joyce.
“Spare a thought for the 1700 Qantas families who weren’t just misled, but were illegally sacked, and are still waiting for justice more than three years later. Qantas dragged them through costly, unsuccessful appeals taking every legal point in the book through an army of expensive silks. In December, Qantas walked away from mediation to reach a settlement for the unlawfully axed workers. It’s another stark reminder of Joyce-led Qantas’ disdain for its own workforce.
“Justice delayed is justice denied. Illegally sacked workers need closure and compensation for some of the hardest years of their lives. Family breakdowns, houses lost, mental and physical health suffering. Qantas has a lot to answer for, and it must pay.
“The last few years have shone a spotlight on the awful, immoral business model at Qantas and the dire consequences for passengers, workers and taxpayers from an absence of regulation.
“Qantas is being held to account through a high court ruling on 1700 illegal sackings, a criminal conviction for discrimination under the Work Health and Safety Act, and a $120 million settlement with the ACCC. But hardworking people should not have to wait for bad actors to be penalised to hope that things will change.
“We need a Safe and Secure Skies Commission to set standards for aviation and rein in corporate greed that has destroyed the aviation industry.”
Federal Court returns 20 May for closing remarks
In September, the High Court ruled Qantas illegally sacked 1700 workers during the pandemic, in unanimous agreement with two previous verdicts of the Federal Court and Full Court of Appeal.
At the end of last year, Qantas walked away from court-ordered mediation to attempt to reach a settlement on compensation and a penalty.
The compensation matter returned to the Federal Court in March, with Qantas attempting to minimise the amount it must pay by arguing it would have sacked and outsourced the workers later anyway. Closing remarks are scheduled for 20 May.
Customer remediation program
More than 86,000 customers who made a booking on a flight two or more days after the cancellation decision had been made will be compensated as part of this program. Those impacted customers will receive $225 for domestic/trans-Tasman flights and $450 for international flights. This is on top of any refund or alternative flight already offered to these customers.
Payments will be available through a dedicated online portal facilitated by professional services firm, Deloitte, and will be independently audited. Qantas will be notifying impacted customers via email from next month
with details about how they can lodge a claim.
Of customers affected, 94 per cent were flying on domestic or trans-Tasman routes, with the remainder flying on the international network. More than 80 per cent of passengers on domestic services were offered an alternative flight departing prior to or within three hours of the scheduled departure time. More than 60 per cent of passengers on international services were offered an alternative flight departing prior to or within 12 hours of the scheduled departure time.
Financial penalty
The impact of the remediation program and penalty will be recognised as an expense in the Group’s Statutory Income Statement for the year ended 30 June 2024. The expense will be recognised as an item outside of Underlying PBT.
The timing of the cash outflow in relation to the remediation program and penalty is expected to occur after 30 June 2024 and therefore will not materially impact Net Debt or Free Cash Flow for the FY24 financial year and will occur instead in the FY25 financial year. (On the assumption that the remediation and penalty will be paid in FY25.)
