In a significant development for air travelers, Qantas is set to distribute $105 million in compensation to passengers who were given flight credits instead of refunds for flights canceled due to COVID-19 disruptions. This decision comes after the airline faced allegations of not meeting its contractual refund obligations to customers whose flight plans were derailed by travel restrictions between the early days of 2020 and November 1, 2022.

Rather than issuing cash refunds, Qantas provided flight credits, which led to a class action lawsuit involving hundreds of thousands of affected passengers. This lawsuit has now culminated in a substantial settlement agreement, revealed by Qantas on Friday, though it still awaits the green light from the Federal Court of Australia. It is important to note that the airline has not admitted to any liability as part of this settlement.

The class action was initiated by Echo Law in 2023, with claims that Qantas misled its customers about their options for refunds. The firm argued that the airline retained customer funds unfairly and engaged in what they described as a “pattern of unconscionable conduct.” These accusations were rooted in the belief that Qantas had breached Australian consumer law by not promptly issuing refunds when flights were canceled back in 2020.

A $105 million settlement to the lawsuit, revealed by Qantas on Friday, is subject to approval by the Federal Court of Australia. Under its terms, the airline makes no admission of liability.

Echo Law filed the class action against Qantas in 2023, alleging it misled customers about their refund options, withheld funds and engaged in a “pattern of unconscionable conduct”.

The firm accused Qantas of breaching Australian consumer law by failing to immediately issue refunds and retaining customers’ funds when flights were cancelled in 2020.

Eligible customers would be able to seek compensation on top of any existing refund rights, Echo Law partner Andrew Paull said.

“This is a very significant financial settlement which will see compensation put into the hands of hundreds of thousands of Qantas customers,” he said in a statement.

“We’re very pleased to have been able to achieve this result.”

Court orders will be sought to directly notify affected group members, including details on how they can claim a share of the settlement if approved.

The airline initially rejected the class action’s claims, declaring it had refunded more than $1 billion to customers impacted by flight disruptions in 2020.

Qantas launched a campaign to encourage customers to use remaining flight credits before removing the expiry date in August 2023 so customers could indefinitely request a cash refund.

The carrier noted it had previously provisioned for the lawsuit and payment was expected in the first half of next financial year.

Qantas reached a separate agreement with the consumer watchdog in 2024 to pay $100 million in penalties for misleading consumers by offering and selling tickets for flights it had already decided to cancel.

It committed to a $20 million remediation program, with compensation payments ranging from $225 for domestic passengers to $450 for international flyers.

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