Sydney — Qantas Airways has agreed to pay 120 million Australian dollars ($79 million) to settle a lawsuit over the sale of thousands of tickets on already canceled flights, in an attempt to end a reputational crisis that has engulfed the airline.
The company will split 20 million Australian dollars between more than 86,000 customers who booked tickets on the so-called “ghost flights” and pay a fine of 100 million instead of defending the lawsuit it had previously vowed to fight, Qantas and the Australian Competition and Consumer Commission (ACCC) said on Monday.
The fine is the biggest ever for an Australian airline and among the largest globally in the sector, although some Australian banks and casino operators have faced higher penalties.
“We recognize Qantas let down customers and fell short of our own standards,” CEO Vanessa Hudson said in a statement.
The settlement “means we can compensate affected customers much sooner than if the case had continued in the Federal Court,” added Hudson, noting the court still must sign off on the settlement.
If the court approves, the settlement will resolve a dispute that featured prominently at a time when Qantas’s brand value tanked in consumer surveys amid a spike in complaints about cancellations.
After the ACCC filed its lawsuit last August, Hudson’s longserving predecessor, Alan Joyce, brought forward his retirement. Hudson became CEO in September.
“This penalty … will send a strong deterrence message to other companies,” ACCC Chair Gina Cass-Gottlieb said in a statement.
The payout, however, would pale against the net profit of 1.47 billion Australian dollars that analysts on average forecast Qantas to report in the year to end-June, according to LSEG data.
People who bought tickets on non-existent domestic flights would get $225 and people with international fares would get $450, on top of a refund, the airline and regulator said.
The ACCC lawsuit centered on the months after Australia’s border reopened in 2022 following two years of Covid restrictions, and airline cancellations and lost luggage complaints spiked globally amid staffing shortages.
Qantas had argued that it faced similar challenges to airlines around the world, but the ACCC said its actions broke consumer law. It had said the airline sometimes sold tickets to flights weeks after they were canceled.
The ACCC’s Cass-Gottlieb noted that the settlement included a promise from Qantas not to repeat the conduct.
