The regulator suing Qantas Airways Ltd. for allegedly selling seats on thousands of cancelled flights is seeking a record penalty of more than A$250 million ($162 million), making the lawsuit a test case for the watchdog’s hardened stance against breaches of consumer law.
Fines for failing customers in Australia should stretch to several hundred million dollars, rather than tens of millions, Gina Cass-Gottlieb, chair of the Australian Competition & Consumer Commission, said in a radio interview with the Australian Broadcasting Corp. on Friday.
Companies in Australia generally aren’t scared enough of breaking the law, and penalties for misleading and mistreating consumers must be sufficiently large to act as a deterrent, she said.
Read More: Qantas Sued for Allegedly Selling Seats on Cancelled Flights
The ACCC, Australia’s primary antitrust regulator, on Thursday started Federal Court proceedings against Qantas, claiming the airline continued to sell tickets on more than 8,000 services last year that it had already scrapped. After flights were pulled, Qantas sold seats on average for more than two weeks, and sometimes longer than a month, the regulator said.
“This should be a record penalty for this conduct,” Cass-Gottlieb said in the interview. “This is not just to be a cost of doing business.”
A fine of A$250 million, for instance, would equate to about 10% of Qantas’ record-breaking annual profit for the 12 months ended June. The company has A$4.4 billion in cash and undrawn debt on its balance sheet.
Read More: It’s Raining Cash at Qantas in Supercharged Post-Covid Era
Qantas said Thursday that it will examine the ACCC’s claims and respond in court.
Shares in Qantas were down 0.9% as of 11:07 a.m. in Sydney, heading for a second day of declines. The stock fell 2% Thursday after the ACCC unveiled its claims against the airline.
The current record for a breach of consumer law in Australia stands at A$125 million against Volkswagen AG, Cass-Gottlieb said. She said the regulator wants Qantas to pay more than double that figure if the case is proven.
“The ACCC is on a path of wanting to substantially increase the penalties that large corporations, in relation to serious conduct, pay for failing consumers,” she said. “So this is going to be an important test for us.”’
(Updates with Qantas’ profit and cash level in the sixth paragraph)
