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Qantas faces class action over pandemic travel credits treated as ‘$1bn in interest-free loans’

Qantas is facing a class action lawsuit over its refund policy for flights cancelled due to the pandemic, with lawyers alleging the airline’s use of travel credits allowed them to treat their customers’ money as more than “$1bn in interest-free loans”.

On Monday, class action firm Echo Law announced it had lodged proceedings against Qantas in the federal court “on behalf of hundreds of thousands” of pandemic-affected travellers with an aim of forcing refunds for all remaining flights credits and compensation due to lost interest on customers’ money held by Qantas.

The firm accuses Qantas of engaging in misleading or deceptive conduct in the way it communicated with its customers in early 2020 about their rights for flights that could not proceed due to Covid restrictions; and of breaching its own contract with customers by failing to provide cash refunds in a timely manner.

The class action also alleges Qantas has been “unjustly enriched by holding a very significant quantum of customer funds that it ought to have refunded” and that Qantas engaged in “a system or pattern of unconscionable conduct” in contravention of Australian consumer law.

Andrew Paull, partner at the recently launched Echo Law, said while the aviation industry suffered major disruption from Covid-induced cancellations, “that is no excuse for Qantas to take advantage of its own customers and effectively treat them as providers of over $1 billion in interest-free loans”.

“Qantas is currently one of the world’s most profitable airlines and [we will allege] that profit has been built, in part, on funds it unlawfully retained from its customers,” he said.

“Qantas held on to its customers’ money and pushed out travel credits with strict conditions, which we allege it was not entitled to do. It now needs to be held accountable and refund that money with interest.”

Paull said while some of its customers suffered financially during the pandemic, Qantas “enjoyed the significant financial benefits of holding billions of dollars in customer payments including interest and reduced borrowing costs”.

Paull was also critical of the flight credit scheme that many customers have used as a result, noting some have been required to pay the airline “more than their original booking to use their credits on new fares and have been pressured by the airline to do that or lose the value of their flight credits”.

Paull said any talk from Qantas about now refunding those yet to use their credits is “both too little and too late”.

“That money ought to have been automatically returned to customers, in most cases more than three years ago, and we are seeking both refunds of all remaining credits as well as compensation for the time customers have been out of pocket,” Paull said.

The class action is being backed by class action funder CASL, and the firm has issued a call for affected customers – even those who have already used Qantas flight credits – to register to join the lawsuit.

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Qantas released a statement on Monday, saying “we completely reject these claims”. The airline argued it had already processed “well in excess of $1bn in refunds” from Covid credits, and said “we’ve been running full page ads and sending emails to encourage customers who want a refund to contact us directly”.

“Qantas has one of the most flexible Covid credit policies of any airline, including among our global peers, and we’ve extended the expiry dates three times,” Qantas said.

In June, Qantas said about $400m in Covid credits were yet to be spent and 80% of these customers had the option of a refund if they preferred.

Covid-related credits will expire on 31 December and need to be booked for trips taken through until December 2024. About $2bn of Covid credits were issued across the Qantas group – which includes budget carrier Jetstar – throughout the pandemic.

The class action announcement came as Qantas on Monday denied it had been engaging in misleading conduct on a separate matter, related to promoting a special return fare to London on its website that was scarcely available and which its own sales staff were unable to book for customers.

Qantas was the most complained about company to the ACCC in 2022-23. The airline is expected to announce a multibillion dollar profit at its results on Thursday.


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