Qantas kept selling airfares on cancelled flights (ghost flights), and equally bad, kept customers with a flight booking in the dark after they cancelled their flight.
By doing so, Qantas is alleged to have engaged in serious and systemic deceptive conduct.
Specifically:
- Qantas kept selling tickets on more than 8,000 cancelled flights for 2 or more days, on average for 16 days and up to 47 days, after the flight was cancelled by Qantas.
- Qantas failed to notify ticket holders who had booked on more than 10,000 flights for 2 or more days, that their flight was cancelled on average for 18 days and up to 48 days, after the flight was cancelled by Qantas.
This article describes how the airline consumer regulator, the Australian Competition & Consumer Commission (ACCC), is holding Qantas to account.
Why did the ACCC take action upon the cancelled flights?
The ACCC has been monitoring the level of contacts and complaints from consumers about poor consumer service by domestic airlines. There was a spike in 2020 which was due to Covid-19 border closures being introduced, for all airlines. Since January 2022 there has been a sharp rise in contacts by Qantas consumers, but not for other airlines.
This figure illustrates:
ACCC contacts received regarding the major domestic airlines (per month) from January 2018 to December 2022 source: Figure 3.3, ACCC submission - Aviation White Paper
What was the reason for the sharp rise in complaints about Qantas? According to the ACCC, in 2022: “the ACCC received more than 1,300 complaints about Qantas cancellations, accounting for half of all complaints about Qantas reported to the ACCC.” (media release)
It came as no surprise that on 31 August 2023, the ACCC issued a media release to announce that ACCC takes court action alleging Qantas advertised flights it had already cancelled.
The media release outlines how the ACCC carefully laid the groundwork before launching action in the Federal Court of Australia against Qantas Airways for deceptive conduct concerning flight cancellations:
“The ACCC’s investigation included engagement with impacted consumers and the serving of compulsory information notices on Qantas. The investigation, which included detailed data analysis by ACCC specialist data analysts, identified that Qantas cancelled almost 1 in 4 flights in the period from May to July 2022, with about 15,000 out of 66,000 domestic and international flights from airports in all states and mainland territories in Qantas’ published schedule being cancelled. These proceedings relate to more than 10,000 of those cancelled flights.”
Both domestic and international flights were cancelled in the three-month period from 1 May 2022 to 31 July 2022. This table was prepared from the examples of cancelled flights given by the ACCC in the media release:
The table shows that the cancellations were not last-minute. And that the flights continued to be advertised for sale and ticket holders were not notified for days and weeks afterwards.
Why the ACCC alleges that Qantas has contravened the Australian Consumer Law
The ACCC’s approach to flight cancellations is that airlines “need to continue to ensure that they are honest and pro-active in advising consumers of delays and cancellations” (ACCC Aviation White Paper p 26).
The ACCC alleges that Qantas has contravened the Australian Consumer Law by making five representations:
- The Scheduled Flight Representation that Qantas continued to offer the flight for sale, when there was no flight with the flight number and scheduled date and time, because Qantas had cancelled it.
- The Reasonable Endeavours Representation that it would use reasonable endeavours to operate the flight at the scheduled date and time, when it did not have grounds for making the representation, because Qantas had already cancelled the particular flight.
- The Flight Unchanged Representation that by continuing to display flight information on the “Manage Booking” page to consumers who had purchased tickets, when the flight had been cancelled, Qantas made a false and misleading representation that the flight had not been cancelled.
- The Manage Booking Representation that it would use reasonable endeavours to operate the flight displayed on the “Manage Booking” page at the scheduled date and time, when Qantas had already cancelled the flight.
- The Wrongly accepted payment that Qantas accepted payments from consumers for tickets on cancelled flights, when it had already cancelled the flight.
The ACCC alleges that by engaging in this conduct and making these representations, Qantas contravened these provisions of the Australian Consumer Law:
- Misleading and Deceptive Conduct or conduct likely to mislead or deceive - section 18;
- Making false or misleading representations as to the quality, performance characteristics, uses or benefits - section 29(1)(b) & (g));
- No reasonable grounds to make future representations – section 4;
- When accepting payment for airfares, Qantas was, or ought reasonably to have been aware that there were reasonable grounds for believing it would not be able to supply the flights within the period specified by it - section 36(3).
Refer to the ACCC v Qantas Concise Statement for more details.
What harm did consumers suffer?
The ACCC has set out the harm to consumers in the Concise Statement, no doubt based on complaints received, as follows:
As a result of Qantas’ conduct, consumers may have made decisions to purchase flights based on false or misleading information.
- Some Qantas customers may have suffered loss in that they have made travel or other arrangements based upon expected flight schedules.
- Consumers who relied on the flight details on the Manage Booking page had less time to make alternative travel arrangements.
- Some customers may have incurred greater cost in making alternate arrangements once they became aware of the cancellation of their flight.
- Some consumers may also have paid a higher fare to fly at a particular chosen time, and may not have done so, or may have sought to travel at a different time or date or with an alternative airline, if they had been aware that the flight they were paying for was already cancelled.
“There are vast distances between Australia’s major cities. Reliable air travel is essential for many consumers in Australia who are seeking to visit loved ones, take holidays, grow their businesses or connect with colleagues. Cancelled flights can result in significant financial, logistical and emotional impacts for consumers,” Ms Cass-Gottlieb said.
What Court orders is the ACCC seeking?
The ACCC is seeking orders including penalties, injunctions, declarations, and costs.
The penalties can be substantial. ACCC Chair Gina Cass-Gottlieb has indicated that the ACCC will be seeking penalties of $250 million (10% of 2023 Financial year profit).
Comment
Qantas will no doubt argue that the flights were cancelled for operational reasons. The ACCC acknowledges the argument:
“Airlines may cancel flights in the short term due to a range of unforeseeable reasons including bad weather, aircraft defects and delays from previous flights. Flight cancellation can also happen due to a range of factors that are within the control of an airline.” (media release)
The ACCC will refute the argument:
“We allege that Qantas made many of these cancellations for reasons that were within its control, such as network optimisation including in response to shifts in consumer demand, route withdrawals or retention of take-off and landing slots at certain airports,” Ms Cass-Gottlieb said.” (media release)
The ACCC will shift the focus from the “actual cancellations”, and whether they were within Qantas’ control, to “Qantas’ conduct after it had cancelled the flights.” (media release).
That is the reason why the ACCC has formulated the representations as it has, to focus on Qantas continuing to sell airfares for cancelled flights (“ghost flights”), and failing to inform ticket holders their flight was cancelled.