The Qantas Airways Limited (ASX: QAN) share price is down another 3% today as the market digests that the ACCC is targeting the airline.
Qantas share price
ACCC action hits Qantas share price
On 31 August 2023, the Australian Competition and Consumer Commission (ACCC) announced that it was taking Qantas to court, alleging that it “engaged in false, misleading and deceptive conduct, by advertising tickets for more than 8,000 flights that it had already cancelled but not removed from sale.”
These 8,000 flights were scheduled to depart between May to July 2022, and the airline kept selling tickets on its website for an average of more than two weeks and in some cases for up to 47 days, after the cancellation of the flights.
The ACCC also alleges that for more than 10,000 flights during the May to July 2022 time period, Qantas did not notify existing ticketholders that their flights had been cancelled for an average of about 18 days, and in some cases for up to 48 days. The ACCC alleges Qantas didn’t update its “manage booking” web page for ticketholders to reflect the cancellation.
This affected around 70% of cancelled flights during this time period, according to the ACCC. Qantas reportedly cancelled around one in four flights between May 2022 to July 2022.
The ACCC thinks Qantas need to do more to deliver quick and equitable outcomes for customers. The ACCC said it continues to receive more complaints about Qantas than about any other business. It pointed out that there is a class action against Qantas and affected consumers (regarding flight credits) may be able to “seek remedies” as part of that class action.
ACCC Chair Gina Cass-Gottlieb said:
We allege that Qantas’ conduct in continuing to sell tickets to cancelled flights, and not updating ticketholders about cancelled flights, left customers with less time to make alternative arrangements and may have led to them paying higher prices to fly at a particular time not knowing that flight had already been cancelled.
There are vast distances between Australia’s major cities. Reliable air travel is essential for many consumers in Australia who are seeking to visit loved ones, take holidays, grow their businesses or connect with colleagues. Cancelled flights can result in significant financial, logistical and emotional impacts for consumers.
Airline’s response
The airline said today that it’s reviewing the allegations made by the ACCC and “will have more to say” once it’s had that opportunity. Sufice to say, how it handles this crisis could have an important impact on the Qantas share price.
Qantas said:
Understandably, these allegations have caused significant concern among our customers, our people and the general community. We want to address those allegations as best we can without cutting across the legal process we are now involved in, which follows an ACCC investigation with which we fully co-operated.
The period of time that the ACCC’s claims relate to, in mid-2022, was one of well-publicised upheaval and uncertainty across the aviation industry, as Qantas struggled to restart post-COVID. We openly acknowledge that our service standards fell well short and we sincerely apologise. We have worked hard to fix them since and that work continues.
Some commentary has suggested that Qantas was engaged in charging a ‘fee for no service’ due to cancelled flights over this period. Our longstanding practice is that when a flight is cancelled, customers are offered an alternative flight as close as possible to their original departure time, or a refund.
The ACCC’s allegations come at a time when Qantas’ reputation has already been hit hard on several fronts. We want the community to know that we hear and understand their disappointment. We know that the only way to fix it is by delivering consistently. We know it will take time to repair. And we are absolutely determined to do that.
Final thoughts on the Qantas share price
This is a really bad look for the ASX travel share. I don’t think the company is worth buying at this stage – it’s not down that much, but could face longer term issues relating to the ACCC court action, as well as changing customer behaviour.
With airfares reportedly coming down and most of the travel demand now online after COVID, I’d say there are better opportunities out there than Qantas.
