Decoding Qantas' "Ghost Flights" Scandal, Which Led To $66 Million Penalty

Australia's competition watchdog, the Australian Competition and Consumer Commission (ACCC), revealed that Qantas “admitted that it misled consumers" by advertising seats on tens of thousands of flights, despite the fact that these flights had already been cancelled. 

What is the issue?

Having long held the moniker "Spirit of Australia," the national carrier Qantas found itself making headlines for all the wrong reasons over the last several months. The airline was accused of selling tickets for flights that were already cancelled. The scandal also extended to the company inadequately informing customers about these cancellations, and providing flight credits with expiration dates for trips affected by the COVID-19 pandemic. 

Allegations against Qantas included a delay in notifying ticket holders about cancellations, with an average notification period of 18 days for 10,000 flights. As a result, several consumers had to suffer through botched and inconvenient attempts at rescheduling, even resulting in financial loss for many.

As per the West Australian, the ACCC pursued Qantas through the federal court, alleging that the airline sold tickets for over 8,000 flights between May and June of 2022, despite these flights already being cancelled. 

At the time of the investigation, the airline was already faced scrutiny on multiple fronts, including criticism for exorbitant ticket prices, accusations of below-par service quality, and the controversial dismissal of 1,700 ground staff amidst the Covid-19 pandemic. 

When the accusations were first levelled, Qantas denied any wrongdoing 

Defending its decision to sell seats on cancelled flights, the airlines argued that  instead of purchasing tickets for individual seats, customers acquire a "bundle of rights" and a commitment from the airline to "do its best to get consumers where they want to be on time". It may be noted that Qantas recorded an annual profit of $1.1 billion last year, marking a significant financial recovery following the turbulence in travel brought on by the pandemic.

ACCC investigation findings

At the end of the ACCC investigation, the airline acknowledged that it did indulge in such malpractices May 2021 and August 2023, a period that also coincided with the most severe stages of the pandemic. The ACCC described Qantas' conduct as "egregious and unacceptable."

As part of a settlement agreement between Qantas and the ACCC, 86,000  impacted customers will receive $13 million in compensation. The aforementioned $66 million fine is subject to approval from the federal court.

During a press conference, ACCC chair Gina Cass-Gottlieb stated that the commission opted to settle to sidestep "legal semantics" and emphasised the importance of prioritising customer reimbursement.

“In the interest of getting an early settlement and the additional payments and compensation to customers, we are no longer taking forward a requirement that they admit to a contravention of selling the service and receiving payment with no intention of providing the service,” Ms Cass-Gottlieb said, adding “It's very interesting what legal semantics might be saying, what we consider as very important is that Qantas is admitting that it misled customers by continuing to sell tickets on flights they had already decided to cancel.”

Qantas' explanation and plans for future 

While Qantas CEO Vanessa Hudson stated that the company did provide adequate support to customers, she added the airline intended to commence remediation efforts prior to court approval, The Chronicle quoted her as saying. 

“Today represents another important step forward as we work towards restoring confidence in the national carrier. When flying resumed after the Covid shutdown, we recognise Qantas let down customers and fell short of our own standards. We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry. We have since updated our processes and are investing in new technology across the Qantas Group to ensure this doesn't happen again. We are focused on making the remediation process as quick and seamless as possible for customers,” Ms Hudson.

She added, “The return to travelling was already stressful for many and we did not deliver enough support for customers and did not have the technology and systems in place to support our people.”

About the fine, ACC's Ms Cass-Gottlieb said: “This $100m [Australian dollars] penalty, if accepted by the Federal Court, will send a strong message to Australian companies that they must comply with the Australian Consumer Law.