Photo: Sebastian Kahnert/dpa-Zentralbild/dpa via AFP
By business reporters Gareth Hutchens and Kate Ainsworth
Qantas has removed the expiry dates on $AUD570 million worth of Covid-19 travel credits owed to Australian and international customers that were issued up until 30 September 2021, which were due to run out at the end of the year.
The airline says customers with Covid credits can now request a cash refund, while Jetstar customers can use their Covid vouchers for flights indefinitely.
The move comes hours after the competition regulator launched legal action against Qantas for allegedly selling tickets for thousands of flights that had already been cancelled during a three-month period in 2022.
Qantas chief executive Alan Joyce said customers can now request a cash refund for their Qantas Covid travel credits at "any point in the future".
Qantas chief executive Alan Joyce. Photo: AFP / Peter Parks
"These credits and vouchers will never expire," Joyce said in a video statement on Thursday.
"We're doing this because we've listened. We know the credit system was not as smooth as it should have been. And while we've improved it recently, and extended the expiry date several times, people lost faith in the process.
"We hope this helps change that."
On Thursday afternoon, Qantas confirmed to the ABC the total value of Covid travel credits impacted by its decision was $570m, comprised of:
- $365m belonging to Qantas customers in Australia
- $90m belonging to Jetstar customers in Australia
- $115m belonging to Qantas and Jetstar customers overseas.
The airline's disclosure of flight credits owed to international customers came after it was scrutinised for not knowing the amount during a heated Senate committee appearance on Monday.
Flight credits to be refunded, vouchers extended indefinitely
The reversal of policy follows days of intense public pressure on the airline.
On Monday, Qantas admitted that it had not disclosed the true value of its unredeemed flight credits, during a fiery Senate committee hearing in Melbourne.
It had publicly said it had $370m in outstanding flight credits on its books, but Senators were told during the hearing this week that Jetstar had another $100m outstanding flight credits on its books, and Qantas' international passengers had more flight credits owed to them too - but at the time were unable to confirm how much.
Qantas executives also said they had set a deadline of 31 December for millions of dollars worth of outstanding flight credits to be claimed, and they refused to confirm if that date would be extended.
However, the airline has now backtracked.
In a statement on Thursday afternoon, Qantas Group said it would remove the expiry date on Covid travel credits that were due to run out at the end of this year.
A Qantas "Covid credit" refers to travel credits for bookings that were made up to and including 30 September 2021.
To encourage more people to reconnect with their credits, from 4 September 2023, Qantas is offering double the standard number of Frequent Flyer Points for any flights booked with a Qantas Covid credit before 31 December 2023.
However, due to system limitations, it says Qantas Covid credits cannot be converted into a travel booking after 31 December 2023, but they can be taken as a cash refund at any time.
Those with Qantas Covid credits can only book travel up to 353 days in advance - meaning if customers booked on 31 December 2023, they can only book travel up until 19 December 2024.
For Jetstar customers, they will now be able to use their Covid vouchers for flights indefinitely.
Jetstar's "Covid vouchers" refer to all Jetstar vouchers that have an expiry date of 31 December 2023, and will be extended on request.
Regulator alleges Qantas sold tickets to cancelled flights
On Thursday morning, the competition regulator also announced it was taking Qantas to the Federal Court of Australia.
The Australian Competition and Consumer Commission (ACCC) alleges Qantas advertised and sold tickets for thousands of flights that it had already cancelled but not removed from sale.
It alleges Qantas sold tickets for flights that were scheduled to depart between May and July 2022, but which had been cancelled, and that it kept selling tickets for those flights on its website for an average of more than two weeks, and in some cases for more than a month.
It also alleges that, for more than 10,000 flights set to take off between May and July 2022, the airline failed to notify ticketholders that their flights had been cancelled for an average of 18 days.
"We allege that Qantas' conduct in continuing to sell tickets to cancelled flights, and not updating ticketholders about cancelled flights, left customers with less time to make alternative arrangements and may have led to them paying higher prices to fly at a particular time not knowing that flight had already been cancelled," ACCC chairperson Gina Cass-Gottlieb said.
"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," she said.
The ACCC launched the action on Thursday in the Federal Court of Australia alleging Qantas Airways engaged in false, misleading or deceptive conduct.
Qantas said it was taking the allegations by the ACCC seriously.
Allegations relate to more than 10,000 flights
The ACCC spoke to Qantas ticketholders during its investigation and served compulsory information notices on the airline.
It said its investigation identified that Qantas cancelled almost one in four 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 court proceedings relate to more than 10,000 of those 15,000 cancelled flights.
As an example of the conduct under scrutiny, the ACCC said ticketholders scheduled to fly on Qantas flight QF93 from Melbourne to Los Angeles on 6 May 2022, were first notified of the cancellation on 4 May - four days after Qantas had cancelled the flight.
It said one ticketholder for that flight was provided with a replacement flight a day before their original departure date, which was communicated only by the Qantas app. As a result, the consumer had to change connecting flights and had a 15-hour layover in Los Angeles, which had a significant impact on them and left them $600 out of pocket.
"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," Cass-Gottlieb said.
"However, this case does not involve any alleged breach in relation to the actual cancellation of flights, but rather relates to Qantas' conduct after it had cancelled the flights."
The ACCC was seeking orders including penalties, injunctions, declarations and costs. Its initiating court documents can be found here.
Examples of flights allegedly affected
In a press release announcing its court action, the ACCC has listed several examples of Qantas' alleged conduct:
- Qantas flight QF93 was scheduled to depart from Melbourne to Los Angeles on 6 May 2022. On 28 April 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 2 May 2022, and did not inform existing ticketholders of the cancellation until 4 May 2022 (two days before the flight)
- Qantas flight QF81 was scheduled to depart from Sydney to Singapore on 4 June 2022. On 8 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 27 March 2022, and did not inform existing ticketholders of the cancellation until 28 March 2022
- Qantas flight QF63 was scheduled to depart from Sydney to Johannesburg on 31 July 2022. On 8 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 27 March 2022, and did not inform existing ticketholders of the cancellation until 28 March 2022
- Qantas flight QF486 was scheduled to depart from Melbourne to Sydney on 1 May 2022. On 18 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 15 March 2022, and did not inform existing ticketholders of the cancellation until 16 March 2022
- Qantas flight QF1785 was scheduled to depart from Gold Coast to Sydney on 1 May 2022. On 17 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 15 March 2022, and did not inform existing ticketholders of the cancellation until 16 March 2022
- Qantas flight QF696 was scheduled to depart from Adelaide to Melbourne on 23 July 2022. On 18 June 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 26 June 2022, and did not inform existing ticketholders of the cancellation until 27 June 2022
- Qantas flight QF1764 was scheduled to depart from Canberra to Gold Coast on 27 June 2022. On 16 June 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 19 June 2022, and did not inform existing ticketholders of the cancellation until 20 June 2022
- Qantas flight QF513 was scheduled to depart from Brisbane to Sydney on 8 June 2022. On 27 May 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 30 May 2022, and did not inform existing ticketholders of the cancellation until 31 May 2022
- Qantas flight QF45 was scheduled to depart from Melbourne to Denpasar on 1 May 2022. On 8 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 24 February 2022, and did not inform existing ticketholders of the cancellation until 23 March 2022
- Qantas flight QF649 was scheduled to depart from Sydney to Perth on 30 July 2022. On 18 February 2022, Qantas made the decision to cancel the flight. Despite this, Qantas did not remove the flight from sale until 7 March 2022, and did not inform existing ticketholders of the cancellation until 8 March 2022
Qantas said it would examine the allegations and respond to them in full in court.
"We have a longstanding approach to managing cancellations for flights, with a focus on providing customers with re-booking options or refunds. It's a process that is consistent with common practice at many other airlines," Qantas said in a statement.
"It's important to note that the period examined by the ACCC between May and July 2022 was a time of unprecedented upheaval for the entire airline industry.
"All airlines were experiencing well-publicised issues from a very challenging restart, with ongoing border uncertainty, industry-wide staff shortages and fleet availability causing a lot of disruption.
"We will examine the details of the ACCC's allegations and respond to them in full in court."
Political controversy, unredeemed flight credits, and a class action
The news of the court action comes as the federal Labor government continues to deal with the fallout from accusations that it prevented Qatar Airways from having more flights in Australia's market to protect Qantas from competition and keep the airline profitable.
Qantas had also been accused of "misleading the Australian public" about the total value of the unredeemed flight credits held by Qantas ticketholders, and Qantas' suggestion that the credits would expire at the end of December 2023.
The ACCC has been encouraged customers holding those flight credits to seek refunds directly from Qantas, and had written to Qantas to strongly object to the airline's policy.
The ACCC said it also noted there was a current class action that has been launched in relation to flight credits, and affected consumers may be able to seek remedies against Qantas as part of this class action.
The ACCC said it continues to receive more complaints about Qantas than about any other business in Australia.
Last year alone, it received more than 1300 complaints about Qantas cancellations, accounting for half of all complaints about Qantas reported to the ACCC.
This story was originally published by the ABC.