Updated May 6th, 2024 at 09:03 IST

Australia's Qantas Airways to pay $79 million to ACCC to settle legal battle

Qantas will allocate A$20 million to compensate over 86,000 affected customers who had booked tickets for these non-operational flights.

Reported by: Business Desk
Qantas Airways | Image:Qantas Airways
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Flight cancellation case: Australia's flagship carrier, Qantas Airways has reached a settlement to resolve a legal battle with the Australian Competition and Consumer Commission (ACCC). The agreement, valued at A$120 million ($79 million), arises from allegations surrounding the sale of tickets for flights that had already been cancelled, colloquially termed as "ghost flights." The move is seen as a concerted effort by Qantas to address a reputational crisis that has beset the airline in recent times.

Under the terms of the settlement, Qantas will allocate A$20 million to compensate over 86,000 affected customers who had booked tickets for these non-operational flights. Additionally, the airline will pay a hefty A$100 million fine, thus opting to resolve the lawsuit rather than engage in protracted legal proceedings.

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CEO Vanessa Hudson acknowledged the company's shortcomings, stating, "We recognise Qantas let down customers and fell short of our own standards." She underlined the expediency of the settlement in facilitating compensation for affected passengers.

The proposed settlement, subject to court approval, would bring closure to a contentious issue that has adversely impacted Qantas' brand perception, prompting the early departure of former CEO Alan Joyce. ACCC Chair Gina Cass-Gottlieb underscored the significance of the imposed penalty as a deterrent to other companies.

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Despite the substantial payout, analysts view this development positively, with Qantas shares trading marginally higher. RBC Capital Markets analyst Owen Birrell sees the resolution as a step towards mitigating post-COVID challenges and improving the company's valuation.

While this settlement addresses one legal battle, Qantas still faces uncertainties regarding the compensation for ground handling staff terminated in 2020, a matter pending court determination.

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The dispute between Qantas and the ACCC stemmed from operational difficulties following the reopening of Australia's borders post-COVID restrictions. The airline contended that it encountered similar challenges as its counterparts globally, yet the ACCC asserted that Qantas' actions contravened consumer law, including the sale of tickets for cancelled flights.

The settlement includes a commitment from Qantas to refrain from repeating the contentious conduct, marking a pivotal agreement in the aviation sector.

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(With Reuters inputs)

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Published May 6th, 2024 at 09:03 IST