Qantas slapped with class action lawsuit
Qantas is staring down the barrel of a class action lawsuit, after being accused of prioritising its financial interests over its contractual commitments to customers during the COVID-19 pandemic.
The legal action was initiated on Monday August 21 in response to the airline's failure to provide refunds totalling more than a billion dollars to its customers.
Echo Law, the plaintiff firm, contends that Qantas deceived customers and essentially held their funds, effectively treating them as interest-free loans.
Andrew Paull, a partner at Echo Law, asserts that Qantas acted unlawfully by introducing a flight credit program in response to border closures caused by the pandemic. Instead of promptly refunding customers for cancelled flights, the airline, in numerous instances, retained the funds for an extended period to bolster its financial performance.
Paull notes that Qantas' own terms and conditions stipulate refunds when cancellations occur outside their control. He points out that the magnitude of the claim has grown due to Qantas' prolonged inaction in addressing these issues.
The class action is not only aiming to secure redress for pending refunds but also seeks compensation for delayed reimbursements. Paull alleges that Qantas has been "unjustly enriched" by withholding money owed to its customers. He equates the interest accrued on these retained funds over the past three years to a substantial sum.
This legal action marks the latest episode in a series of challenges faced by Australia's largest airline due to the pandemic's far-reaching repercussions, which severely disrupted its operations. The Australian Competition and Consumer Commission (ACCC) has expressed concern and pressured the company to simplify the refund process following a surge in customer complaints.
Consumer advocates have also criticised Qantas for delays in refunding customers. Choice, a consumer advocacy group, even bestowed a "shonky award" upon Qantas due to reports of customers using credits being required to pay extra.
Paull estimates that approximately $400 million in refunds remains outstanding to date. He asserts that Qantas prioritised safeguarding its financial position over honouring its commitments to customers during the pandemic, potentially misleading customers by presenting the travel credits as acts of goodwill rather than a fulfilment of contractual obligations.
Responding to the lawsuit, a Qantas spokesperson stated on Monday that the airline had not yet received the lawsuit. The spokesperson categorically rejected the allegations, asserting that Qantas had already processed over $1 billion in refunds arising from COVID-19-related credits for customers impacted by lockdowns and border closures.
Moreover, the spokesperson refuted claims that Qantas derived financial gains from delaying refund disbursements, highlighting the substantial revenue loss of $25 billion and $7 billion in losses due to the pandemic. (Qantas has subsequently repaid significant portions of its pandemic debts and recently reported substantial profits after receiving substantial financial support from taxpayers during the pandemic period.)
Qantas also dismissed allegations of delayed refund payments to affected customers. The spokesperson emphasised that the airline has consistently communicated the refund process to customers when flights were canceled.
However, Paull contends that Qantas has created formidable barriers for customers seeking to exercise their consumer rights, including unfulfilled promises of callbacks and refunds that were granted but never processed.