Qantas to Fork Out US$74 Million to End Covid Credit Class Action
- Qantas will pay A$105 million (US$74.3 million) to resolve a lawsuit over pandemic flight credits.
- The case covers cancelled flights between January 2020 and November 2022.
- Settlement includes no admission of liability, the airline stressed.
- Expiration dates on credits were removed earlier, but cash refunds were not initially offered.
The payout wipes a two-year legal overhang just as global travel demand rebounds.
QANTAS—SYDNEY—Qantas Airways has agreed to hand over more than US$74 million to passengers who accused the carrier of withholding cash refunds for Covid-cancelled flights, drawing a line under one of the last big pandemic-era consumer disputes still lingering over the aviation sector.
The Australian flag-carrier said on Friday it will pay A$105 million into a settlement fund, equivalent to roughly US$74.3 million at current exchange rates, to resolve the class action filed in the Federal Court of Australia. The lawsuit centred on Qantas’ decision to issue flight credits with expiry dates instead of immediate cash reimbursements when governments closed borders and grounded fleets.
While Qantas removed those expiry dates in 2021 under regulatory pressure, the absence of upfront cash refunds triggered a backlash that culminated in the multimillion-dollar claim. The airline continues to deny any legal wrongdoing, noting the settlement “involves no admission of liability.”
What the A$105 Million Payout Really Costs Qantas
The headline figure—A$105 million—represents only the cash component of Qantas’ final bill. Legal expenses, administrative costs of identifying hundreds of thousands of eligible passengers, and the foregone interest on money already collected in 2020 and 2021 add materially to the tab, according to airline finance specialists.
Professor Rico Merkert, transport economist at the University of Sydney, points out that the settlement equals roughly 1.4% of Qantas’ pre-pandemic annual profit. “It’s not existential, but it is material enough to show up in next year’s statutory accounts,” Merkert says. “The bigger cost is reputational; Australian consumers have long memories when it comes to feeling short-changed.”
Reserve impact
Qantas said the amount will be recognised as an exceptional item in its 2024 financial statements, meaning underlying earnings guidance remains unchanged. Investors appeared relieved: the stock closed flat after the announcement, having already fallen 0.69% in the session.
The carrier had previously flagged that provisions for Covid-related litigation could reach A$150 million, so the final number lands comfortably below the upper end of market expectations. Analysts at Credit Suisse told clients the outcome removes a key legal overhang and should allow management to refocus on fleet renewal and debt reduction.
Yet consumer advocates argue the settlement still leaves a gap between what passengers originally paid and what they will ultimately recover. “The interest Qantas earned on customers’ money for up to 32 months is not being refunded,” says Gerard Brody, former CEO of the Consumer Action Law Centre. “That’s a hidden benefit to the airline that won’t show up in the A$105 million.”
Timeline: From Cancelled Flights to Courtroom Showdown
Understanding how the dispute escalated requires rewinding to the first wave of border closures. Between January 2020 and November 2022 Qantas and its low-cost arm Jetstar cancelled roughly 387,000 individual flights, affecting more than 4 million bookings globally.
Instead of processing refunds, the airline initially funnelled customers into a credit system that imposed expiry deadlines. Consumer regulator the Australian Competition & Consumer Commission (ACCC) received 34,000 complaints in 2020 alone, triple the previous yearly record.
Regulatory pressure mounts
By August 2020 the ACCC publicly warned airlines that credit-only policies may breach consumer guarantees. Qantas bowed to pressure in September 2021 by removing expiry dates, but refused to reinstate cash refunds for customers who had already accepted credits.
That stance triggered the class action filed in late 2021 by law firm Phi Finney McDonald on behalf of lead applicant Brendan Sherriff, a Melbourne small-business owner who held more than A$3,000 in credits. The lawsuit alleged Qantas engaged in misleading conduct by representing that credits were the only remedy available.
Fast-forward to March 2024: mediation held over three days in Sydney produced the A$105 million deal, subject to court approval in June. If approved, the fund will operate for 18 months, with unclaimed money reverting to charity rather than Qantas.
How Many Passengers Stand to Get Money Back?
Exact numbers remain fluid until the Federal Court approves the settlement schema, but Phi Finney McDonald estimates that between 200,000 and 250,000 Australian residents hold eligible credits. The firm believes another 50,000 overseas customers could also qualify, pushing the potential claimant pool close to 300,000.
Eligibility hinges on two criteria: the ticket must have been purchased before 31 March 2020 for a flight that Qantas itself cancelled between 1 January 2020 and 30 November 2022, and the passenger must have received a credit rather than a refund. Travel agents’ bookings are included provided the fare was ticketed on Qantas documentation.
Compensation bands
Instead of repaying face value, the scheme will allocate compensation points based on the original fare bucket and distance flown. Domestic economy tickets will attract a fixed A$400 payment; international business class travellers could receive up to A$2,800. Customers who have already used their credits will still be able to claim, a concession that lifts total participation rates.
Aviation analyst Ian Douglas at UNSW says the tiered structure is designed to cap liability while encouraging broad participation. “It’s a classic actuarial trade-off—Qantas caps the cash exposure without having to audit every individual fare,” Douglas notes. “Rough maths suggests an average payout around A$420 per claim.”
Will Other Airlines Face Similar Covid-Era Lawsuits?
Qantas is unlikely to be the last carrier writing multi-million-dollar cheques. Law firms in the United States, Britain and Canada are already advancing parallel claims against major airline groups that relied heavily on credit vouchers during 2020-21. The central allegation mirrors the Australian case: carriers unlawfully withheld refunds for flights they cancelled.
In the U.S., a federal class action against American Airlines is proceeding in Fort Worth, Texas, with plaintiffs seeking at least US$250 million. Across the Atlantic, UK-based firm Kehoe Law is assembling a group claim against British Airways parent IAG that could encompass 1.2 million passengers.
Regulatory divergence
Why the litigation wave now? Dr. Becca Waddell, air-transport policy researcher at Swinburne University, says the answer lies in contrasting refund rules. “The U.S. Department of Transportation mandates cash refunds for cancelled flights; Australia and the EU offer similar protections. Airlines tried to contract around those obligations using credits, and courts are starting to test that strategy,” she explains.
Qantas’ willingness to settle without admitting fault may embolden plaintiffs’ lawyers overseas, but it also provides a template for limiting damages. “A$105 million is a digestible number for a company that size,” adds Waddell. “Expect more settlements, not trials.”
What Does the Settlement Mean for Qantas’ Brand Recovery?
Chief Executive Vanessa Hudson, who took the controls in September 2023, has staked her tenure on rebuilding what she calls the ‘trust deficit’ left by years of border closures, executive turnover and customer complaints. Settling the flight-credits class action removes a noisy distraction, but marketing experts warn the reputational repair is far from finished.
Brand tracking by consultancy CoreData shows Qantas’ net trust score among frequent flyers remains 22 points below its 2019 benchmark. “The credit saga reinforced a perception that Qantas put its balance sheet ahead of passengers,” says CoreData’s Andrew Hickey. “A financial settlement alone won’t flip that narrative; customers need to see tangible service improvements.”
Service pledges
Hudson has responded by scrapping change fees on domestic fares, reinstating free meals on short-haul routes and launching a 30-minute call-back guarantee. Early metrics are encouraging: domestic on-time arrivals improved to 81% in February 2024 versus 74% a year earlier, according to Bureau of Infrastructure data.
Still, aviation marketing strategist Lisa Teh cautions that goodwill is fragile. “Passengers remember how they were treated when things went wrong. Qantas needs 12 to 18 months of consistent performance before trust metrics recover,” she says.
Frequently Asked Questions
Q: Why did Qantas face a class action over Covid-era flight credits?
Passengers sued after Qantas cancelled flights and issued time-limited credits instead of cash refunds. The suit claimed this breached consumer law because customers paid for services that were never delivered.
Q: How much will Qantas pay and who receives the money?
The airline will pay A$105 million (US$74.3 million) into a settlement fund. Eligible passengers who held credits for cancelled flights between January 2020 and November 2022 can apply for compensation.
Q: Does the settlement mean Qantas admitted wrongdoing?
No. Qantas agreed to the payout ‘without admission of liability’, a standard clause that lets the carrier close the case while denying any legal fault.
