Echo Law has announced that Qantas Airways has agreed to pay $105 million to settle a class action lodged in the Federal Court in August 2023 on behalf of hundreds of thousands of customers whose flights were cancelled during the COVID pandemic. The settlement is subject to approval by the Federal Court of Australia, and under its terms the airline makes no admission of liability.
The lawsuit accused Qantas of breaching contracted refund obligations to customers who had flights cancelled between the start of 2020 and November 1, 2022. The class action alleged that Qantas customers were contractually entitled to cash refunds when their flights were cancelled due to COVID travel restrictions, but instead received restricted flight credits.
For many customers, those credits proved cumbersome. Qantas customers were entitled to full cash refunds for cancelled flights, but the airline issued the majority with travel credits or vouchers subject to significant restrictions that would expire if not used, making them of lower value than refunds to which customers were entitled. The airline holds $375 million of outstanding flight credits passengers can claim for cancelled flights across Qantas and subsidiary Jetstar during the COVID-19 pandemic.
The settlement sum is in addition to Qantas' public commitment given shortly after the class action commenced in August 2023 to provide refunds to all COVID credit holders, and under the settlement, eligible customers will be able to seek compensation in addition to any existing refund rights. This follows Qantas's move in August 2023 to remove expiry dates on COVID-related flight credits, allowing customers to request cash refunds indefinitely.
When will customers receive payments?
The airline noted it had previously provisioned for the lawsuit and the increased sum would be recognised outside of underlying earnings in the second half of the financial year. According to Qantas, the settlement amount will be paid to a court-approved settlement administrator, with payment currently expected in the first half of FY27.
The parties will seek orders from the Court to directly notify affected group members of the settlement and their rights, with notices including details regarding how eligible group members can claim their share of the settlement if approved by the Court. Customers do not need to take action immediately; Echo Law is a class actions focused law firm founded by experienced legal professionals, and the process will be managed through the court-appointed administrator once approval is granted.
The settlement represents one of several major financial consequences Qantas has faced over its pandemic-era customer service failures. Late last year, the airline reached an agreement with the Australian Competition and Consumer Commission to resolve court proceedings in relation to flight cancellation processes, with Qantas commencing a projected $20 million remediation program for impacted passengers and agreeing to pay a $100 million civil penalty.