‘Unjustly enriched’: Qantas faces class action over COVID refunds

The pandemic resulted in hundreds of flights being cancelled, leaving customers with credits.

The pandemic resulted in hundreds of flights being cancelled, leaving customers with credits. Photo: Qantas

Qantas has been slammed for what experts say is a pattern of behaviour that seeks to protect its own financial interests over its contractual obligations to customers, after the airline was hit with a new class action lawsuit on Monday.

The airline was slapped with the massive class action in response to its failure to issue more than a billion dollars in refunds to customers during the pandemic.

The plaintiff firm, Echo Law, alleges Qantas misled customers and effectively held onto their money as a no-interest loan.

Echo Law partner Andrew Paull claims Qantas acted unlawfully when it set up a flight credit program for customers affected by border closures at the onset of COVID-19.

He said that instead of refunding customers immediately, the airline has in many cases held onto the money for years to support its bottom line.

“Their own terms and conditions say that when a flight is cancelled outside of their control they will refund you,” Mr Paull said.

“The claim has become bigger and bigger because Qantas has done nothing for such a long time.”

The class action will seek remedy for customers who have yet to be refunded but will also seek compensation for customers for delayed payments, with Mr Paull alleging the airline has been “unjustly enriched” with the money it owes to customers.

Significant interest

“Call it interest on this money that has been held by Qantas now for over three years,” he said.

“That interest is now very significant.”

The case is just the latest drama to hit Australia’s largest airline after a turbulent few years dealing with the fallout from the pandemic, which grounded the vast majority of its business.

It has drawn the ire of the Australian Competition and Consumer Commission (ACCC), which has put the company under pressure to make the refund process easier after a complaint spike.

Consumer advocates have taken aim over delayed refunds too, with Choice awarding Qantas one of its “shonky awards” because it received reports customers using credits had to pay more.

Adam Glezer from Consumer Champion, who has been working with Qantas customers to obtain refunds for cancelled flights, said he wasn’t surprised a lawsuit has surfaced.

“I’ve had a large number of clients that have found Qantas’ refund process excruciating,” he said.

“I’m still receiving numerous requests from customers who have been owed significant amounts since 2020.”

Mr Paull said there was an estimated $400 million still not refunded to date.

“Their first priority in this issue has been protecting their financial position, and they’ve put that ahead of customers,” Mr Paull said.

“They wrote to everyone [at the onset of COVID] and presented it [travel credits] as something they were doing in customer interests.

“That misled people because they came away thinking Qantas was doing them a favour – in fact, Qantas was avoiding their contractual obligations.”

In a statement in response to the case on Monday, a Qantas spokesperson claimed the airline had not been served a lawsuit.

Claims rejected

“We completely reject these claims,” the spokesperson said in an emailed statement.

“We have already processed well in excess of $1 billion in refunds from COVID credits for customers who were impacted by lockdowns and border closures.”

The spokesperson also rejected claims that Qantas enjoyed financial benefits from delaying refund payouts during COVID, pointing to $25 billion in lost revenue and $7 billion in losses.

(Qantas has since gone on to repay large amounts of its COVID debts and recently posted a bumper profit after receiving billions in taxpayer support during the pandemic years.)

Qantas also rejected claims that it has taken too long to payout refunds to affected customers.

“We’ve always been very clear to customers that if Qantas cancelled the flight, they are entitled to a refund and the process for obtaining that refund,” a spokesperson said.

‘A pattern of conduct’

But Mr Paull says Qantas has made it “incredibly difficult” for customers to exercise their consumer rights, with people failing to receive promised call backs and refunds that were awarded but never actually paid.

“It all becomes part of a pattern of conduct which we say is unconscionable,” Mr Paull said.

Mr Glezer said Qantas’ failure to refund customers shows why the federal government must pass laws setting limits on how airlines refund customers, similar to those in the UK and US.

“In those jurisdictions, a full refund is required for cancelled flights within a short period of time, even in situations such as COVID,” he said.

“Despite it being brought to the federal government’s attention on multiple occasions, they have fallen asleep at the wheel and done nothing to ensure the protection of consumers.”

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