News & Insights

Qantas has agreed to pay an eye watering penalty for charging consumers for cancelled flights. But what can other airlines or businesses glean from the penalty proposed and will this deter other businesses from doing the same?

ACCC allegations

You would have seen the news back in 2023 that the Australian Competition and Consumer Commission (ACCC) commenced Court proceedings against Qantas for misleading and deceiving consumers in relation to Qantas’ cancelled flights, in breach of the Australian Consumer Law (ACL).

In the Court action, the ACCC alleged that:

• from May 2021 to July 2022, Qantas advertised and sold tickets for more than 8,000 already-cancelled flights; and
• for certain flights scheduled to depart in May to July 2022, Qantas did not notify travellers with sufficient promptness that their existing flights had been cancelled.

During the Court case, Qantas admitted that its conduct actually spanned from May 2021 to August 2023, involving tens of thousands of cancelled flights scheduled to depart between May 2022 to May 2024.

The ACCC and Qantas agree to penalty

By agreement, the ACCC and Qantas have asked the Federal Court to:

• impose a pecuniary penalty on Qantas in the amount of $100M (the penalty can be approved or increased or decreased by the Court);
• approve Qantas’ proposed payments of approx. $20M in compensation to more than 86,000 customers who were sold tickets on the cancelled flights, or who were rebooked onto these cancelled flights after their original flights had been cancelled (this is in addition to the compensation that these customers may have already received from Qantas); and
• approve Qantas making a contribution towards the ACCC’s legal costs.

The proposed penalty for Qantas soars even higher than the $60M penalty handed down to Google in 2023 for misleading and deceptive conduct, indicating that the ACCC continues to seek more significant financial penalties…. And is being successful in getting them.

Further undertakings for Qantas

Qantas has also agreed in a Court-enforceable Undertaking to (and to ensure that its low-cost subsidiary Jetstar will):

• refrain from engaging in similar conduct in the future;
• stop selling cancelled flights as soon as practicable (and in any event, within 24 hours of making the decision to cancel);
• notify customers of cancelled flights as soon as practicable (and no more than 48 hours after making the decision to cancel); and
• review its consumer compliance program, including with third party auditors who will monitor Qantas’ compliance and provide reports to the ACCC and the Qantas Board.

Key takeaways

Misleading and deceptive conduct can occur in many different ways in businesses – it isn’t just limited to the content of overt advertising offers, statements and representations.  Misleading and deceptive conduct can also occur by silence, inaction, and by not correcting known misapprehensions.  In Qantas’ case, the offending conduct arose from not stopping advertising quickly enough, and not updating affected consumers quickly enough, when its business offerings had changed from the original.

To help mitigate the risks of misleading and deceptive conduct in your business, you should:

• train your staff (and refresh them regularly) on the tenets of misleading and deceptive conduct;
• remind your staff that they need to be constantly vigilant about both their actions… and their inactions;
• remember that truthful and accurate advertising and interactions require a whole-of-business approach – make sure that your marketing department knows what your operations department is doing, etc, and that your teams are not unnecessarily siloed; and
• establish and maintain a comprehensive compliance program, with ‘gate’ procedures and checklists to follow to help ensure ongoing compliance.

For assistance with your business’ compliance with the Competition and Consumer Act, and to arrange interactive training sessions for your teams, contact the experts at Macpherson Kelley.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.