By David Taylor, ABC
Australia’s biggest airline Qantas was accused of misleading its own customers by not refunding cancelled flights during the Covid-19 era.
Photo: WILLIAM WEST/AFP
Qantas has agreed to settle a class action ​related to flight credits issued during the Covid-19 ‌pandemic.
The settlement, subject to approval by the Federal Court, relates to flights scheduled to depart ​between January 2020 and November 2022 that were cancelled by the airline.
Filed in August 2023, the class action included allegations the Qantas breached contractual obligations by failing to provide refunds for cancelled flights during the pandemic.
Qantas has agreed to settle the class action ​for A$105 million ($127m), with no admission of liability.
The settlement is higher than ​the A$55 million provision that Qantas Airways mentioned in ​its latest half-year results in February for the flight credits class action.
Qantas prepared for financial hit
Analysts said Qantas delayed the inevitable by engaging in a protracted legal case.
“When a flight is cancelled, the law generally requires a refund,” The Montgomery Fund founder Roger Montgomery said.
At the time Qantas chief executive Alan Joyce said Qantas customers could request a cash refund for their Qantas Covid travel credits at “any point in the future”.
“These credits and vouchers will never expire,” Joyce said in a video statement.
“We’re doing this because we’ve listened.
“We know the credit system was not as smooth as it should have been.
“And while we’ve improved it recently, and extended the expiry date several times, people lost faith in the process.”
Montgomery said this Qantas response was not received well by Qantas shareholders.
“Making credits the default and adding expiry dates to them made Qantas look dodgy and put them on shaky legal ground,” he said.
Despite this, Montgomery said, investors would take very little notice of this legal news.
“The airline had already provisioned for the legal costs and probably already expected to pay, so this settlement won’t hurt financially, and shareholders are content because the ‘uncertainty’ is kicked into touch,” he said.
Montgomery says the airline may hope this settlement, if approved by the Federal Court, will assist with its turnaround strategy under new Chief executive Vanessa Hudson.
“Qantas likely realised a courtroom loss would be far more expensive and damaging than a $105 million payout,” he said.
“Don’t forget they already lost significant ground with court losses over selling tickets to ghost flights and illegal layoffs during the pandemic.
“[Qantas] just needs to move on and be a good corporate citizen for once.
“It also helps CEO Vanessa Hudson show the airline has moved past the Alan Joyce era.”
Cash could hit bank accounts this year
Echo Law commenced the class action on behalf of Qantas customers who held tickets for domestic or international flights that were cancelled by Qantas between 2020 and 2022, including due to the Covid-19 pandemic.
“In the coming weeks the Court will be asked to approve a notice to Group Members confirming the details of the proposed settlement and setting out what Group Members must do to claim their share,” the law firm said in a statement.
“Until that notice is distributed, there is nothing that Group Members need to do.”
The airline says the settlement amount will be paid to a court-approved administrator and affected customers can expect money in their bank account by the end of this year.
For Qantas customers, it added in a statement today, “a ‘COVID Credit’ refers to travel credits for bookings up to and including 31 September 2021.”
– ABC