Qantas to scrap COVID-19 refund expiry date

Qantas Airways will scrap the expiry date on refunds for passengers whose travel plans were disrupted due to the COVID-19 border closures, as the consumer watchdog takes the airline to court over claims it falsely advertised and sold already-cancelled flights.

Qantas has confirmed that all customers who had their flights cancelled by the airline due to a COVID-19 lockdown will be able to request a refund indefinitely, following a report in this masthead about the plan on Thursday morning.

The consumer watchdog has launched a court case against Qantas, claiming the airline falsely advertised 8000 flights it had already cancelled.Credit: Bloomberg

The concession on flight credits follows public pressure, which culminated at a Senate hearing into the cost of living on Monday.

It follows a letter from the Australian Competition and Consumer Commission (ACCC) which expressed “strong concerns” with the carrier’s planned December expiry date for the refunds. The consumer watchdog launched a high-profile Federal Court case against the airline on Thursday, alleging it falsely advertised more than 8000 flights it had already cancelled.

The ACCC said Qantas kept selling tickets on its website for an average of more than two weeks, and up to 47 days in some cases, after the cancellation of those flights, which were scheduled to depart between May and July 2022.

It also alleges that for more than 10,000 flights scheduled to depart during that period, Qantas didn’t tell existing ticket holders for about 18 days – and in some cases, for up to 48 days – that their flights had been cancelled.

In about 70 per cent of flights cancelled during those months, “Qantas either continued to sell tickets for the flight on its website for two days or more, or delayed informing existing ticket holders that their flight was cancelled for two days or more, or both”, the ACCC said in a statement announcing the legal action on Thursday morning.

The airline’s conduct likely affected “the travel plans of tens of thousands of people” and “left customers with less time to make alternative arrangements and may have led them to paying higher prices to fly at a particular time”, ACCC chair Gina Cass-Gottlieb said.

If convicted, each breach of consumer law faces a maximum penalty of $10 million, or three times the total benefits obtained. If the total turnover cannot be determined, the group may have to hand over 10 per cent of its annual multibillion-dollar turnover.

Qantas said it would examine the ACCC allegations and respond to them in full in court.

“It’s important to note that the period examined by the ACCC between May and July 2022 was a time of unprecedented upheaval for the entire airline industry. All airlines were experiencing well-publicised issues from a very challenging restart, with ongoing border uncertainty, industry-wide staff shortages and fleet availability causing a lot of disruption,” a spokesperson said.

Treasurer Jim Chalmers said the allegations against Qantas were “deeply concerning”.

“This is the consumer watchdog doing its job and a reminder that businesses need to do the right thing by people,” he said. “Breaches of consumer law carry heavy penalties.”

Sydney Airport boss Geoff Culbert said the ACCC’s allegations amplify the need for the government to implement the findings of the 2020 Harris Review into the airport’s slot management system.

“We have been shining a spotlight on cancellations and delays for six years,” he said. “These allegations provide even more justification to implement the findings of the Harris review, including an immediate forensic audit into cancellations and slot misuse, a beefed-up compliance regime, and an enforcement process that punishes misbehaviour.

“Slots are owned by Australian taxpayers, and they should be used to benefit the public, not incumbent airlines.”

Qantas is already facing a class action on behalf of disrupted passengers who allege they were unable to be compensated for their cancelled flights.

The airline confirmed on Thursday afternoon it would contact all affected passengers to alert them of the new COVID-19 flight credit policy, which will come into effect from September 4.

Qantas boss Alan Joyce said the airline had scrapped the expiry date in the hope customers’ faith in the airline would be restored.

“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. We hope this helps change that,” he said.

The airline is also offering a deal to double frequent flyer points as a way to encourage passengers to consider booking another flight instead of demanding a cash refund.

Prime Minister Anthony Albanese said the ACCC was doing its job, which “is to look after consumers”.

“Something I called for in recent days, of Qantas recognising the need to look after those people who had made bookings for flights that have been cancelled, [is] to not have those credits expire and to be able to receive either a refund or a use of their flights,” he said.

It’s the fourth time the company has amended its COVID-19 refund and flight credit policy in an attempt to lower the multibillion-dollar owed-credit balance it accrued over the period.

Passengers were previously eligible for a refund until December 2023. Those who already obtained flight credits from the company still have until the end of this year to book a flight.

Customers who booked flights through a travel agent can also get a refund, while those who have a flight credit from Jetstar will also be able to use them indefinitely.

There is still around $370 million that Qantas is yet to refund or exchange, and, as revealed by Jetstar boss Steph Tully after a hostile exchange with Senator Tony Sheldon at the hearing this week, its budget arm is sitting on another $100 million.

There is also an undeclared amount in overseas bookings. Sources close to Qantas say that amount ranges between $50 million and $100 million.

Qantas’ biggest rival, Virgin Australia, has around $100 million in COVID-19 credits yet to be used, down from a total sum of $1.2 billion accrued between September 2020 and the end of July 2022.

Virgin’s credits require passengers to book and travel by the end of December this year. They are also subject to the airline’s standard credits policy, which means only a certain number of seats on any flight can be booked by those trying to use a flight credit.

Regional Express, Australia’s third domestic carrier with about 5 per cent of the market, has refunded all passengers affected by cancellations over the lockdown period.

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