The head of the consumer watchdog has said Qantas should pay a penalty of hundreds of millions of dollars if found guilty of extensive breaches of consumer law, after the airline group allegedly advertised tickets for thousands of already cancelled flights in 2022.
Australian Competition and Consumer Commission chair Gina Cass-Gottlieb said the group should pay a penalty big enough to act as a deterrent to other companies if found by the Federal Court to have falsely advertised sales on 8000 flights weeks after they’d been cancelled.
“We think the penalties in consumer law cases have not been high enough. If a corporate giant is told to pay $100 million, it is seen as the cost of doing business. We would hope hundreds of millions of dollars would be enough to act as a deterrent to not only Qantas but others if these allegations are satisfied in court,” Cass-Gottlieb said in an interview with this masthead on Friday.
The ACCC rarely weighs in on the size of a potential penalty before the matter has been decided by the Federal Court, but Cass-Gottlieb said it was important companies were put on notice.
Volkswagen was hit with a record $125 million fine in December 2019 after being found to have made false representations about its compliance with Australia’s diesel emissions standards. The Federal Court imposed a record consumer law penalty of $438 million against former vocational colleges Phoenix Institute and CTI in July, but the companies are in liquidation and are not expected to pay the fines.
Cass-Gottlieb repeated her call for the Federal Court to impose a penalty of “more than double” Volkswagen’s penalty, first aired on ABC Radio, as a deterrent to it and other companies which have allegedly failed their customers. She said the watchdog was on a path to substantially increase the penalties that corporations paid in relation to serious conduct.
According to the ACCC, Qantas kept selling tickets on its website for an average of more than two weeks, and up to 47 days in some cases, after those flights were cancelled. The flights were scheduled to depart between May and July 2022. The consumer watchdog also alleges that ticket holders on about 10,000 flights were not told their flight had been cancelled for between 18 and 48 days.
Each breach of consumer law faces a maximum penalty of $10 million, or three times the total benefits obtained. If the total turnover cannot be determined, the business might have to pay 10 per cent of its annual multibillion-dollar turnover. It is unlikely the court would consider implementing the maximum penalty.
Qantas said it would examine the ACCC allegations and respond in full to them in court.
“It’s important to note that the period examined by the ACCC 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,” the airline said.
The ACCC chair acknowledged that while there was no clear benefit for Qantas over the two-month period the alleged conduct took place, there was a clear loss to consumers. Australian Consumer Law’s section regarding misleading and deceptive conduct is not about intent, but negligence.
“Consumers are likely to have paid more to get another flight with less notice in order to fly to the same place they needed to. In other cases, they were not able to fly where they needed to but have paid accommodation. Aside from the stress, time loss and emotional disruption, they have less time to change their travel arrangement. For us, that impact on consumers is enough and is why this matters,” Cass-Gottlieb.
The ACCC said it has not been contacted by consumers with similar allegations of deceptive conduct by other airlines. It did confirm it will continue to look at the issue of COVID-19 credit expiry dates now that Qantas has walked back its December 31 refund expiry for those who had their flights cancelled by the airline due to COVID-19 lockdowns.
Qantas boss Alan Joyce is eligible for a short-term bonus of up to $4.3 million for this financial year, depending on the approval of the group’s board.
This figure is in addition to his long-term bonus, about $18 million worth of shares that he has already been granted.
Ownership Matters’ Dean Paatsch said investors would scrutinise the board’s decision.
“Investors will be keenly watching the board’s decision in relation to Alan Joyce’s short-term bonus in light of the ACCC’s issuance of proceedings and their pursuance of at least $250 million in potential penalties,” Paatsch said.
Qantas’ share price dropped 2 per cent to $5.82 in mid-morning trade. The airline business is down 10 per cent over the past month.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Source: Thanks smh.com