‘Bit of a trick’: Qantas under pressure to scrap expiry date on $800m unused credit
Qantas is under pressure to extend or scrap the end-of-year expiry date on $800 million worth of unused COVID travel credits, as would-be travellers grapple with restrictions on credit use imposed by the airline and expensive airfares.
Australia’s biggest carrier is sitting on $8.3 billion in revenue received in advance, $800 million of which is unused travel credits that are set to expire at the end of this year.
But consumer advocacy group Choice, an industry expert and the chief of Australian Federation of Travel Agents (AFTA) are urging the carrier to extend the expiry date for at least another 12 months or ditch it altogether, with Choice arguing that the outstanding balance was a result of certain conditions imposed by Qantas on how passengers use their credits.
Under Qantas’ terms, passengers who booked their original flight after September 30, 2021 can only use their credit on flights that cost the same or more than the initial amount. On fares that are lower than the credit amount, passengers have to buy a new ticket.
“This seemed to us like a bit of a trick by Qantas to try and generate new revenue,” said Choice’s Andy Kollmorgen.
A customer with $500 worth of credit would not be able to use it on a $475 flight, even if they were willing to forego $25, which many passengers were, he said. “We’re not sure why this restriction was placed.”
The independent organisation last year submitted a formal complaint to the ACCC to investigate whether Qantas’ credit policy was fair after conducting a survey in January 2022 that found more than a third of passengers who used their flight credits had to pay more, while one in five said they were unsuccessful in using their credits. Some passengers who received credit for international flights were not able to use this credit on domestic flights.
“We still hear from plenty of disgruntled Qantas customers, many of whom are having great trouble using their credits,” said Kollmorgen.
“They can book that revenue without having to deal with the person flying on the plane, and that goes into their coffers after a year. That’s a very short expiry period for flights, some people don’t travel that often, just for special occasions. So all these impediments to the credits seem quite deliberate.”
Travellers are also contending with a range of inflation pressures, including airfares that are 20 per cent more expensive than pre-COVID levels, and competing for fewer seats, although both major carriers have said they will increase capacity in the year ahead.
Rising interest rates are also adding pressure on household budgets, a factor that could force people to reconsider travel plans later this year.
Qantas’ COVID credit balance has reduced to $800 million from $1.4 billion in April last year. Earlier this week, the airline’s chief Alan Joyce said the carrier was actively encouraging customers to use their credits through a dedicated phone line, monthly email reminders, and sales promotions that allow customers to claim double frequent flyer points when they book with their credit.
“We’re trying to incentivise you to use your credit,” he said. “We’re doing more in this space than I think anyone around is.”
The airline has committed to returning its domestic operations to full capacity by June this year and international operations by 2024 as it contends with supply chain and staffing issues that have hit airlines all around the world. In an op-ed for this masthead, Joyce said Qantas had returned to the most on-time domestic carrier for five months in a row.
Aviation commentator and Airline Ratings founder Geoffrey Thomas said the dominant carrier should reconsider its December 31 deadline to allow customers more time to use their flight credit.
“Maybe what Qantas should be saying is: ‘We understand the inflationary pressure, we understand the dynamics, and we’re going to roll them over for another 12 months’,” said Thomas. “I think it would buy them a lot of brownie points.”
He pointed to Qantas’ $1 billion result announced yesterday that showed a swing back to profit after three years of steep losses. “Things are going well. It’s time to possibly be a bit generous.”
Australian Federation of Travel Agents chief executive Dean Long questioned whether airlines should be allowed to impose any expiry date at all on travel credits and called for Qantas to consider refunds.
“There’s really no reason for why those credits shouldn’t be turned into refunds,” he said. “Make it an unlimited credit, or max it out for another two years when prices … return to normality.”
Virgin Australia has two types of travel credit policies: Future Flight credits, which were issued to customers because the airline entered voluntary administration in April 2020, and standard credits. Future Flight credit holders must book their travel before December 31 while standard credits expire 12 months after the date of issue.
Meanwhile, regional airline Rex implemented a refund policy in 2020 and proactively refunded customers even before they had processed a request.
“Given that Rex adopted a very flexible approach to COVID-19 related refunds … there are only a small number of outstanding travel credits,” said a Rex spokesperson in a statement.
A spokesperson for the ACCC said it was unable to comment on the investigation it launched in April last year because it was still ongoing.
“When there is an outcome, we’ll make our findings public,” the spokesperson said.
“There’s no average time for investigations as each case is different. For example, evidence-gathering and data analysis processes can in some instances be complex. Businesses must comply with the terms and conditions set out. Consumers are advised to make sure they read and understand those terms and conditions.”
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