Qantas has been hit with a class action lawsuit seeking millions of dollars in refunds and compensation for customers who had flights cancelled after the COVID-19 outbreak.
Echo Law filed the lawsuit against Australia’s national carrier in the Federal Court last Monday. They are alleging that the airline misled customers about their refund options, withheld funds, and engaged in a “pattern of unconscionable conduct.”
The airline has rejected this and said it refunded more than $1 billion to customers impacted by flight disruptions in 2020—the first year of the coronavirus pandemic, which sparked lengthy border closures.
The action comes one month after Qantas launched a campaign to encourage customers to use the airline’s remaining $400 million in flight credits and after Australia’s consumer watchdog indicated its probe into the issue was almost complete.
Backed by litigation funder CASL, the lawsuit alleges Qantas breached Australia Consumer Law by failing to immediately issue refunds when flights were cancelled in 2020 and by retaining customers’ funds.
Echo Law partner Andrew Paull said Qantas initially only offered customers access to “travel credits with strict conditions” rather than returning their payments.
“We allege Qantas breached the law by failing to be transparent and immediately issue refunds to customers when flights were cancelled,” he said.
“While COVID posed major disruption to air travel and resulted in cancellations that no airline wished to make, that is no excuse for Qantas to take advantage of its own customers and effectively treat them as providers of over $1 billion in interest-free loans,” he said.
Mr Paull claimed some Qantas customers had been forced to spend more money with the airline to use their original flight credits, while others may not be able to use the credit before it expired on December 31, 2023.”
“While Qantas has talked in recent weeks of giving customers the option of requesting a refund, this is both too little and too late,” he said.
Qantas Credits System Among Worlds Most Flexible
Qantas extended the expiry date on travel credits issued in 2020 three times and, in July, launched a campaign for customers to find and use flight credits from 2020.Qantas said its flight credit policies were among the most flexible in the world, and it had improved its system to simplify the refund process.
The airline said it held about $400 million in COVID-era credits, and more than $1 billion had been claimed by Qantas and Jetstar customers.
“We have already processed well in excess of $1 billion in refunds from COVID credits for customers who were impacted by lockdowns and border closures,” Qantas said.
“The majority of customers with COVID credits can get a refund, and we’ve been running full-page ads and sending emails to encourage customers who want a refund to contact us directly.”
Qantas chief customer officer Markus Svensson said many travel credits were for between $100 and $500 and could be located online.
“We'll keep reaching out directly to customers, particularly ahead of these credits expiring at the end of this year,” he said.
Regulation and governance associate professor Rob Nicholls said the opportunity from Qantas travel credits was limited.
Mr Nicholls said the national carrier should “extend the life of those credits” to restore balance for consumers.
“There is some element of choice for Qantas management and the Qantas board here, and exercising that choice could stifle the class action lawsuit,” he said.
On Monday, Qantas announced plans to add more than 250,000 seats on its international network to destinations including New York, Los Angeles, Johannesburg and Bali.
The carrier said the boost would bring its capacity to 80 per cent of its pre-pandemic service.
The Australian Competition and Consumer Commission is investigating Qantas’ handling of credits and refunds after issuing a warning to the airline in 2020 and receiving a complaint from consumer group Choice in April 2022.
