Losing ground: Qantas sued over ‘ghost flights’

Are you one of the thousands of Australians affected by Qantas flight cancellations? Forced into a long layover at an international airport? Or hundreds of extra dollars out of pocket after your flight was rescheduled at the last minute?

You would be furious to learn that the national carrier had cancelled those flights well before you booked. Or that even if you had booked a real flight, rather than a ‘ghost’ one, Qantas delayed telling you that it had cancelled your flight for an average of 18 days.

In action launched in the Federal Court, the Australian Competition and Consumer Commission (ACCC) alleges the airline did just that for thousands of flights booked between May and July 2022.

 

 

The ACCC has alleged Qantas engaged in “false, misleading or deceptive conduct, by advertising tickets for more than 8000 flights that it had already cancelled but not removed from sale”.

The competition watchdog also claims Qantas kept selling tickets on its website for an average of two weeks after flights had been cancelled - sometimes up to 47 days after the fact.

On top of that, the ACCC alleges that for more than 10,000 flights in the same time period, the airline did not let passengers know their flight had been cancelled for an average of 18 days.

This means that if you went to check your flight on the Qantas website’s Manage My Booking section, it would still show as active well after the airline had scrapped it.

The effect on Qantas customers

ACCC Chair Gina Cass-Gotlieb said the watchdog had lodged the court action, seeking penalties of up to $250 million - which would be a record penalty - after a detailed investigation into the airline’s flight cancellation practices.

“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,” she said.

Additionally, she commented on the effect disrupted travel arrangements have on passengers. “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,” Ms Cass-Gottlieb said. “Cancelled flights can result in significant financial, logistical and emotional impacts for consumers.”

In one of many examples provided by the ACCC in its action, the watchdog alleges Qantas sold 21 tickets for a flight from Sydney to San Francisco after it had cancelled the flight, with the last ticket sold 40 days after cancellation.

Examples of flights allegedly affected

Flight	Number of days the flight remained on sale - after it was cancelled	Days before departure customers were told their flight was cancelled	Route
QF63	47	125	Sydney to Johannesburg
QF81	47	68	Sydney to Singapore
QF1785	26	46	Gold Coast to Sydney
QF486	25	46	Melbourne to Sydney
QF45	16	38	Melbourne to Denpasar
QF649	17	117	Sydney to Perth
QF696	8	26	Adelaide to Melbourne
QF93	4	2	Melbourne to Los Angeles
QF1764	3	6	Canberra to Gold Coast
QF513	3	7	Brisbane to Sydney

Source: ACCC

The authority pointed out that the court action did not involve a breach in relation to flight cancellations, but rather the airline’s conduct after those cancellations.

The ACCC also investigated rival Virgin and found it had not engaged in similar conduct.

Record consumer complaints

The ACCC launched its investigation on the back of record complaints about the airline, with 1740 consumers lodging complaints in the 2022-2023 financial year, a jump of 68 percent on the previous year.

“In the past year, we received 1300 complaints related to cancellations and that is roughly 50 percent of the complaints that we received in relation to Qantas services and the others related to credits, refunds other aspects of service,” Ms Cass-Gottlieb said.

The Airline Customer Advocate reports similar spikes - of the 6918 complaints from customers, 4000 were about Qantas.

The ACCC has been monitoring prices, costs and profits for domestic air travel between June 2020 until June 2023 to:

• • Uncover behaviour in the industry that may damage competition
  • Identify signs that competition in the industry is not effective

Australians had been complaining about Qantas at record rates in a number of areas, including poor customer service, the high price of flights and the handling of flight credits. In its June 2023 report, the ACCC highlighted a few key concerns:

• • The Qantas Group expected to make a record profit for 2022-23 of $2.425–2.465 billion before tax - almost $1 billion higher than its prior record result in 2018.
  • The second was that revenue over April–May from domestic travel was at 118 percent of pre-pandemic levels, and 125 percent for international travel.

What the ACCC is alleging Qantas did

Specialist data analysts from the ACCC found that Qantas had cancelled about 15,000 flights, or almost one in four domestic and international flights, from May to July 2022. The court action relates to 10,000 of those flights.

 

 

Example flights

The ACCC cites a list of examples to support its case against the carrier, including:

• • QF93 was scheduled to depart from Melbourne to Los Angeles on 6 May 2022. On 28 April 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 2 May 2022. They did not inform existing ticketholders of the cancellation until 4 May 2022 (two days before the flight).
  • QF81 was scheduled to depart from Sydney to Singapore on 4 June 2022. On 8 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 27 March 2022. They did not inform existing ticketholders of the cancellation until 28 March 2022.
  • QF486 was scheduled to depart from Melbourne to Sydney on 1 May 2022. On 18 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 15 March 2022. They did not inform existing ticketholders of the cancellation until 16 March 2022.
  • QF45 was scheduled to depart from Melbourne to Denpasar on 1 May 2022. On 8 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 24 February 2022. They did not inform existing ticketholders of the cancellation until 23 March 2022.
  • QF649 was scheduled to depart from Sydney to Perth on 30 July 2022. On 18 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 7 March 2022. They not inform existing ticketholders of the cancellation until 8 March 2022.

The potential penalties

The ACCC is seeking orders against the national carrier that include penalties, injunctions, declarations and costs.

Ms Cass-Gottlieb has indicated she wants the court to send a message with a record penalty of more than $250 million.

"We are going to seek a penalty that will underline this is not just a cost of doing business, it is to deter conduct of this nature," she said.

This would be double the highest penalty handed down for breaches of Australian Consumer Law - $125 million against Volkswagen in 2019 for making false representations about compliance with Australian diesel emissions standards.

There are also calls for the Australian Government to review its decision to block Qatar Airways from adding 21 more weekly flights “in the national interest”. At the time the government argued that the extra competition could reduce airfares and threaten Qantas’ viability in the medium and long term.

Former treasurer Wayne Swan believes there are grounds for a review, and Flight Centre has launched an advertising campaign aimed at reversing the decision.

“This decision just doesn’t stack up, there’s no logic to it,” Flight Centre Chief Executive Graham Turner said. “A lot of people can't afford the sort of airfare prices. There are some good specials around but on average they are about 40 or 50 per cent more expensive than pre-COVID and this is important to Australia."

Ms Cass-Gottlieb also agreed with her predecessors that Qatar’s expansion into Australia would have been a welcome addition. Although she could not say how much it would have brought down flight prices.

Qantas backflip on flight credits

With pressure mounting on Qantas, the carrier announced it would scrap the end-of-year expiry date for $570 million worth of unclaimed flight credits. The previous December 31 expiry date would have seen Qantas claim the value of the unused credits at the end of the year.

At a recent Senate hearing, Qantas CEO Alan Joyce, Jetstar boss Stephanie Tully and corporate affairs head Andrew McGinnes also admitted the airline was holding $100 million in unused Jetstar flight credits it hadn't previously disclosed.

Customers with Qantas flight credits will be able to claim a cash refund at any time. However, they can only use the credits to book flights up until the end of the year "due to a system limitation". Customers with Jetstar credit cannot claim a cash refund but can instead use them to book a new flight "indefinitely".

 

 

Joyce said the decision to remove the expiry date on credits – just days after Qantas defended the deadline at the Senate hearing – was a result of the airline listening to customers. "We know the credit system was not as smooth as it should have been," he said.

Calls for an airline ombudsman

The good news for travellers is that the ACCC has used this latest report to call for the government to implement an airline ombudsman saying a similar model to one used by the telecommunication industry could mean it being implemented as soon as this year.

In the meantime, if you are a Qantas customer affected by flight cancellations and want a refund on your flight credit, lodge your request  with us and we’ll help you handle it.