Qantas’ explanations come too late for angry passengers and investors

But the explanations already come too late to soften community perceptions that Qantas – once again – did the wrong thing by its customers. Legal arguments in court can’t ever do much to fix that.

The Qantas commitment to do better from now on won’t satisfy many shareholders waiting to demonstrate their ire at the AGM.

Continuing them also risks further publicly enmeshing the new CEO and ex-CFO, Vanessa Hudson, in the now discredited approach of the Alan Joyce era despite the airline’s promises of “greater humility”.

Qantas is determined to insist this was never a case of “fees for no service” – embarrassingly revealed as common practice in financial services by the banking royal commission. That’s because all passengers ultimately received an alternative flight or full refund.

That ignores the extreme inconvenience and additional costs involved for many customers, greatly exacerbated by the airline’s practice of continuing to offer flights for sale that had already been cancelled.

The airline’s rationale was that any delays between deciding to cancel thousands of flights and notifying hundreds of thousands customers was to allow Qantas time to find an alternative in a very difficult period.

But the chaos and shortages of the COVID-19 era – combined with the antiquated, inadequate technology used by Qantas – meant this process often took much longer than before. Other airlines facing similar scheduling problems didn’t face this level of problems.

Explanation for delayed notifications

The ACCC found that during the May to July 2022 period it examined, for example, that the average delay in Qantas notifying passengers of cancelled flights was 18 days. In about 70 per cent of those cases, it was more than 48 hours.

“We waited to be able to tell customers ‘your flight has been changed’ rather than ‘your flight has been cancelled’,” Qantas explains.

The alternative, it says, would have created a lot of needless uncertainty and even longer call centre waiting times – which already had thousands of deeply frustrated callers holding on for hours.

The Qantas “update” notes the airline had already sincerely apologised for the many things it got wrong in restarting operations after COVID-19 lockdowns – including unacceptable delays.

But its promise – “consistent with obligations under consumer law” – was to get customers to their destination as close as possible to the original time booked, either on their original or an alternative service at no additional cost. (No mention of the additional cost in then rebooking connecting flights on other airlines, often at higher prices.)

Qantas concedes some of the longer delays in notifying customers were due to human error and process failures, while maintaining none of this was done for commercial gain.

“Mistakes were made,” the airline notes with wonderful use of the passive voice. “While that level of upheaval is hopefully never repeated, we have strengthened our systems and processes to make sure it doesn’t happen again.”

That apparently includes immediately removing cancelled flights from sale in a manual process. (So why do other airlines have technology systems that manage to do this?)

Customers’ revenge has caught up

The Qantas commitment to do better from now on not only won’t count for much in a legal process aimed at assessing culpability and penalties for past misdeeds.

It won’t satisfy many shareholders waiting to demonstrate their ire at the AGM.

Joyce and chairman Richard Goyder may lament the convenient hypocrisy among an investor class that repeatedly lauded Qantas’ financial performance and its fat profit margins as recently as the airline’s last results in August.

The customers’ revenge has well and truly caught up – greatly accelerated by continued savage exposure of the airline’s failings by The Australian Financial Review’s recently departed Rear Window columnist Joe Aston.

The clamour of complaints about high prices and bad service at a once beloved national institution eventually infected the share price – as well as the federal government, triggered by Labor’s refusal to allow Qatar Airways more flights.

Not that Qantas is alone in taking advantage of a distorted system for airport slots, for example. But it’s also become the lightning rod for lack of competition.

Within a few days of the ACCC lodging its lawsuit, Joyce had brought forward his retirement by two months.

Goyder belatedly attempted to deflect the still virulent antagonism with his own commitment to retire ahead of next year’s AGM, along with two other directors stepping down in February.

This looks unlikely to satisfy demands for greater board accountability, imperilling at least one of two directors up for re-election.

But what will really focus joint community and shareholder complaints on Friday is the size of Joyce’s $20 million-plus pay packet on exit.

Goyder’s assurances that up to $10 million of that is “at risk” ring hollow given legal limits on the board’s ability to “claw back” awarded bonuses without evidence of “serious misconduct, breach of obligations to the group or a material misstatement” in the company’s accounts.

Call the Joyce option cost plus, plus, plus.