ACCC action re cancelled Qantas flights

[FlyingKangaroo]

Disagree on this! $100 million is not ‘spare change’ to any company! They didn’t make any profit of this, so nothing to off-set the 100m against!

Qantas made a profit of $1.25 billion this last financial year. This fine represents a mere 8% of just one year's profits.

Qantas was also holding onto over a billion dollars of passenger cash in the form of "credits" for flights it didn't realistically plan to operate (nor did it) that it made deliberately difficult (if not impossible for many) to be refunded. It is entirely reasonable to suggest that the interest the company could have made on that money during that time could cover this settlement.

$100m may sound like a lot to the average punter -- and you can bet that's what Qantas is hoping for -- but in context relative to Qantas' revenue and profits, it's simply not. Especially when the allegation was one of outright fraud.

This is the lethargic outcome for the most complained about company in the country that's borne the brunt of years of bad media coverage. Bad actors facing less public and media scrutiny will be more than happy to take an 8% hit on pure profit when they may well get away with it entirely.

 

[Cynicor]

I doubt shareholders would be happy with 8% hit to cash profit no matter what; but especially in such a volatile industry

 

[Gremlin]

A slap on the wrist. The real problem here is that these actions are meant to have a deterrent effect, but this settlement simply sends the message to others that the risk is one worth taking; in the occasional event you're pulled onto the carpet, the fine is a manageable and acceptable "cost of doing business."

Be careful what you wish for.

ACCC, in whatever action they take, still have a responsibility to support consumer competition. Imagine if they pushed hard for a $1bn fine and QF ended up scaling back their fleet expansion plans in order to pay? Not sure that would be seen as a win for competition and appropriate support for the Australian consumers.

 

[FlyingKangaroo]

I doubt shareholders would be happy with 8% hit to cash profit no matter what; but especially in such a volatile industry

No, but I also suspect most shareholders would have been happier had Qantas not committed the alleged fraud to begin with, and even after they did, expected the consequence to be far worse.

Regardless, we won't have to speculate for long. The sharemarket will start to tell us in about 10 minutes.

 

[RooFlyer]

Disagree on this! $100 million is not ‘spare change’ to any company! They didn’t make any profit of this, so nothing to off-set the 100m against!

There’ll fund it just like they did the recent minor improvements to the frequent flyer program. By increasing fees and charges.

I think Qantas will consider it got off lightly

 

[FlyingKangaroo]

Be careful what you wish for.

ACCC, in whatever action they take, still have a responsibility to support consumer competition. Imagine if they pushed hard for a $1bn fine and QF ended up scaling back their fleet expansion plans in order to pay? Not sure that would be seen as a win for competition and appropriate support for the Australian consumers.

So, should we tolerate illegal behaviour against consumers because the consequences of punishing it sufficiently to deter it again might be bad for those consumers?

The answer is of course no. The fine needs to be sufficient to deter the behaviour, while still weighing the impact on consumers. I don't think $1bn would strike the right balance (and isn't what the ACCC ever asked for), but nor do I think $100m does.

 

[CaptJCool]

My mothers $545 free cash from non-refundable tic is helping pay that fine

Thanks Mum and Happy Birthday

 

[RooFlyer]

My mothers $545 free cash from non-refundable tic is helping pay that fine

Hopefully she’ll be eligible for the $20 million compo fund for reimbursements. I have a feeling I might be too. I didn’t notice it at the time but I think the cancellation would’ve been under that regime.

 

[jb747]

They'll simply reduce their non management staff salaries by 8%. Fixed.

Perhaps a more effective penalty would be to give all of the money to their competitors....

 

[CaptJCool]

Hopefully she’ll be eligible for the $20 million compo fund for reimbursements. I have a feeling I might be too. I didn’t notice it at the time but I think the cancellation would’ve been under that regime.

Hopefully

Given the large RRIA ($8 billion)
the savings on financing costs ($400 million plus) more than cover this fine

 

[Gremlin]

So, should we tolerate illegal behaviour against consumers because the consequences of punishing it sufficiently to deter it again might be bad for those consumers?

The answer is of course no. The fine needs to be sufficient to deter the behaviour, while still weighing the impact on consumers. I don't think $1bn would strike the right balance (and isn't what the ACCC ever asked for), but nor do I think $100m does.

Of course not. But there are legit commercial considerations always with this. On both sides. What's an acceptable amount of legal fees (paid by taxpayers) for the ACCC to rack up pursuing a higher figure? How does that stack up against the risk of not getting a favourable result?

I personally think that's an excellent outcome. One of the things that often happens in these sorts of settlements is that they're done without admission of fault. That's not the case here. Admitting fault here is going to come with a range of downstream headaches for Qantas that are not wrapped up in the headline $ figure of settlement.

 

[AIRwin]

Perhaps a more effective penalty would be to give all of the money to their competitors....

Bonza!

 

[mel-world]

QF should just send the bill to AJ. I'm sure his hands were all over this scheme.

 

[muppet]

Hopefully she’ll be eligible for the $20 million compo fund for reimbursements. I have a feeling I might be too. I didn’t notice it at the time but I think the cancellation would’ve been under that regime.

I think the devil will be in the detail. Given the extent of the scheme and only 80,000 payments being made - seems to very limited criteria to get the payment.

It sounds like you had to have purchased the ticket or been moved onto the flight after the decision to cancel. So if you bought it months before, you won’t be eligible for the cash.

 

[RooFlyer]

QF should just send the bill to AJ. I'm sure his hands were all over this scheme.

Not to mention senior legal counsel . They were there through every single other Qantas debacle.

 

[oz_mark]

Hmm, so they don't want to test their 'bundle of rights' argument. Maybe they want to look good to head off any passenger rights legislation that may be comtemplated.....

 

[kangarooflyer88]

Very interesting agreement reached. Some may point out that the ACCC selled out here rather than dragging them over the coals in Federal court as planned. I suppose the question here is whether the outcome would have been any different if it went to court and the ACCC won on its claims? Yes, they may have very well received a higher amount in terms of penalty and compensation. However, on the flip side they could have lost and more importantly this case may have dragged on for years and years with affected passengers not receiving a dime. Remember, Qantas has the right to appeal decisions made by the Federal Court so this could have ended up in court for a long time indeed. Qantas has admitted guilt, which also potentially opens them up for civil lawsuits from customers now in addition to whatever they have to pay out now. For instance, suppose someone was on an international flight that was subject to these ghost flights, and receives this entitlement from Qantas, well Qantas has admitted they've done something wrong and they were on an international flight so the Montreal Convention comes into play. It wouldn't be much of a stretch for the passenger to sue Qantas for thousands in moral damages under the Montreal Convention, particularly if they can prove that the emotional harm caused by the misrepresentation was beyond the pale.

Importantly, looking at the ACCC press release we get a number of interesting tidbits about the ghost flights and the compensation:

• Qantas has now admitted that its misconduct continued from 21 May 2021 until 26 August 2023, affecting tens of thousands of flights scheduled to depart between 1 May 2022 and 10 May 2024.
• Qantas will pay $225 to domestic ticketholders and $450 to international ticketholders. These payments are on top of any remedies these consumers already received from Qantas, such as alternative flights or refunds.
• Qantas will contact affected consumers to inform them about the payment scheme by 10 July 2024, and consumers should direct queries about the scheme to Qantas
• undertakes to the ACCC to make payments to customers

Overall not a bad outcome all things considered, and certainly more than what some countries would do if such a fiasco occured (I'm looking at you Canada!)

-RooFlyer88

 

[jb747]

• Qantas will contact affected consumers to inform them about the payment scheme by 10 July 2024, and consumers should direct queries about the scheme to Qantas

Your call is important to us, but due to the extremely large volume of calls that we are currently experiencing, please ring back at a much later date.

 

[AIRwin]

Hmm, so they don't want to test their 'bundle of rights' argument. Maybe they want to look good to head off any passenger rights legislation that may be comtemplated.....

They have already made a blunder of flights

 

[kyle]

Hmm, so they don't want to test their 'bundle of rights' argument. Maybe they want to look good to head off any passenger rights legislation that may be comtemplated.....

And I was waiting with popcorn to hear the arguments. Oh well... we kind of knew it would settle...