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Qantas has been hit with a class action lawsuit seeking millions of dollars in refunds and compensation for customers who had flights cancelled following the COVID outbreak.
- The lawsuit alleges Qantas breached consumer laws by failing to immediately issue refunds
- About $400 million in credits remain with Qantas after $1 billion were claimed
- Qantas rejected the allegations and said refund policies had always been clear
Echo Law filed the lawsuit against Australia's national carrier in the Federal Court on Monday, alleging the airline misled customers about their refund options, withheld funds, and engaged in a "pattern of unconscionable conduct".
Qantas has completely rejected the allegations and said it had not been served a claim as of midday on Monday.
The action comes one month after Qantas launched a campaign to encourage customers to use the remaining $400 million in flight credits held by the airline, and after Australia's consumer watchdog indicated its probe into the issue was almost complete.
It is also a few months ahead of CEO Alan Joyce stepping down after 15 years in the job and handing over to Vanessa Hudson in November.
Backed by litigation funder CASL, the lawsuit alleges Qantas breached Australia Consumer Law by failing to immediately issue refunds when flights were cancelled in 2020 and by retaining customers' funds.
Echo Law partner Andrew Paull said Qantas initially only offered customers access to use "travel credits with strict conditions" rather than returning their payments.
"We allege Qantas breached the law by failing to be transparent and immediately issue refunds to customers when flights were cancelled," he said.
"While COVID posed major disruption to air travel and resulted in cancellations that no airline wished to make, 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."
In a statement Qantas also rejected the allegation it had enjoyed significant financial benefits during COVID saying it had lost "more than $25 billion in revenue and posted statutory losses of $7 billion during the pandemic".
In February the airline posted a $1 billion half-year net profit and is expected to announce its profits for the financial year on Thursday.
Mr Paull said some Qantas customers had been forced to spend more money with the airline to use their original flight credits, while others may not be able to use the credit before it expired on December 31, 2023.
"While Qantas has talked in recent weeks of giving customers the option of requesting a refund, this is both too little and too late," he said.
"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."
Qantas said that it had always been clear to customers that "they are entitled to a refund" if a flight was cancelled and that thousands have already made claims.
Qantas has extended the expiry date on travel credits issued in 2020 three times, and in July launched a campaign to encourage customers to find and use flight credits from 2020.
The airline said it held about $400 million in COVID-era credits and more than $1 billion had been claimed by Qantas and Jetstar customers.
Qantas chief customer officer Markus Svensson said many travel credits were for between $100 and $500 and could be located using an online tool.
"We'll keep reaching out directly to customers, particularly ahead of these credits expiring at the end of this year," he said.
The Australian Competition and Consumer Commission is also investigating Qantas' handling of credits and refunds after issuing a warning to the airline in 2020 and receiving a complaint from consumer group Choice in April 2022.
AAP/ABC