Qantas faces passenger class action over $1b of pandemic flight credit

Qantas flight QF3 lands at JFK Airport in New York.

The Australian national carrier has been landed with a class action lawsuit on behalf of hundreds of thousands of passengers who were issued pandemic flight credit.

Qantas has been accused of handling over $1.08 billion of travellers’ money in pandemic flight credit, which lawyers claim amounts to an enormous “interest-free loan”.

Echo Law filed proceedings of a class-action lawsuit against the carrier on behalf of their clients, which the firm claims to represent “hundreds of thousands” of passengers holding pandemic credit. The firm aims to force the carrier to finally refund outstanding credits with compensation for interest.

Echo Law alleges the airline has “enjoyed significant financial benefits” from the scheme. In some cases they claim passengers may have been misled or encouraged to opt for flight credit, when they were entitled to full cash refunds.

“Qantas customers were entitled to a full cash refund for those cancelled flights,” says the Melbourne law firm’s website.

“Instead, Qantas issued the majority of its customers with travel credits or vouchers, which were subject to significant restrictions and would expire if not used.”

Andrew Paull, a partner of Echo Law, told the Guardian that the practice of issuing flight credit was widely adopted by airlines during the Covid pandemic, “that is no excuse for Qantas to take advantage of its own customers and effectively treat them as providers of over $1b in interest-free loans”.

Talking to the Herald, Paull said they expect the claim “includes a significant number of New Zealand customers.”

As an open class action the firm says that, under Australian Consumer Law, passengers would be automatically included in the class action. Even if passengers have been issued with travel or a refund, they may still be entitled to compensation on interest or the terms by which the credits were issued.

Following large losses during the pandemic the Australian carrier had delivered record profits from the resurgence of travel. Qantas was projected to deliver a net profit of $2.48b this financial year.

The airline published a statement on Monday in response to Echo Law’s filings, saying they “completely reject these claims.”

Qantas says it has already issued over $1b of refunds and that they have been taking measures to encourage customers to apply for refunds or use remaining credit, with advertising campaigns targeted at passengers.

Earlier this year, in June Qantas said that it still held over $430 million in unclaimed pandemic credits. Many of these customers were entitled to cash refunds, if they so chose.

Airlines’ Covid credit conundrum

Qantas was one of many airlines that relied heavily on issuing credit during the Covid-19 pandemic to deal with widespread cancellations.

However, while many pandemic travel impacts are no longer an issue, the credits still remain. Large volumes of unspent credits have caused headaches for both passengers and airlines.

Air New Zealand, who at the end of last year held pandemic credit on behalf of around half a million passengers, extended the validity of credits several times to avoid these expiring without being claimed.

In March the airline face a backlog of 20,000 weather-related refunds due to the sheer volume of credits still being used to pay for flights. The amount of flights being partially paid for with Covid credit, led to delayed refunds ballooning to 10 times the normal volume.

Air New Zealand’s chief customer officer Leanne Geraghty said that their pandemic credit scheme was clearly explained to customers “both at the time those credits were issued and on an ongoing basis”.

“We have been flexible with our credit usage and adapted over time as needed to meet the changing circumstances of the pandemic,” she said.