Sydney –
Qantas has agreed to a AU$105 million settlement of a class action brought over its use of flight credits in place of cash refunds for Covid-19 cancelled services, a move that could deliver payments to hundreds of thousands of customers if approved by the Federal Court of Australia. Compensation amounts will vary according to the original fare paid and the length of time customers were kept out of cash before using credits or receiving refunds, and will depend on how many eligible customers make claims.
The settlement, which carries no admission of liability from the airline, resolves a claim launched in 2023 by Echo Law that Qantas misled customers about refund options and breached consumer protections for flights cancelled between early 2020 and November 2022. Echo Law alleged the carrier engaged in a “pattern of unconscionable conduct” in retaining customer funds rather than immediately issuing refunds.
Settlement terms and class claims
Qantas will pay AU$105 million under the terms announced in the company statement included in the class action notice. The proceeding is structured as an open class action, meaning eligible passengers are included unless they opt out, and any settlement must be approved by the court as fair and reasonable for the group overall.
Affected customers will be directly notified by court order via email and SMS if the settlement is approved, and will be able to claim a share of the fund on top of any existing refund entitlements. The claims scheme is expected to prioritise customers who were held in credits for the longest periods or who had higher-value bookings, though detailed allocation formulas will be set out in the court-approved settlement scheme.
- Class period: cancelled flights from the start of 2020 to November 2022, when widespread Covid-19 travel restrictions and schedule changes resulted in large numbers of disrupted services.
- Settlement sum: AU$105 million (subject to Federal Court approval and deductions for legal costs and administration).
- Prior Qantas remediation and penalties: separate 2024 agreement with the consumer watchdog totalling AU$100 million in penalties and a AU$20 million remediation program, with payments ranging from AU$225 for domestic passengers to AU$450 for international passengers.
- Qantas previously reported refunding more than AUD$1 billion to customers impacted by flight disruptions in 2020.
- Qantas removed expiry dates from remaining flight credits in August 2023 so customers could indefinitely request cash refunds, after sustained criticism of its Covid-era credit policies.
“For typical customers, these are amounts in the hundreds of dollars, potentially higher for people with larger flight purchases,” he told reporters on Friday.
Echo Law partner Andrew Paull said the exact payout each claimant receives will also hinge on claims participation rates and the size of individual fares. He added: “These are not individually gigantic sums but they’re meaningful sums, particularly at a time when people are doing it tough.” Paull also warned that processing notifications and claims would take time: “(The process) can take a little bit of time, but we would expect it may be in the second half of the year,” Paull said, referring to when customers might begin to see payments if the court timetable proceeds as anticipated.
Financial, governance and market implications
The settlement is covered by provisions Qantas previously set aside for litigation, and the carrier said payment was expected in the first half of the 2026/27 financial year. The company recorded a modest share-market reaction on the day the settlement was announced, with Qantas securities only fractionally weaker on the Australian Securities Exchange, suggesting investors had largely priced in the litigation risk.
Qantas, Australia’s largest airline and a publicly listed group that operates both the full-service Qantas brand and the low-cost Jetstar subsidiary, has faced multiple Covid-era disputes over vouchers and refunds. Jetstar remains defendant in a separate class action related to travel vouchers issued for Covid-cancelled flights, leaving ongoing contingent liabilities for the group.
For corporate governance, the settlement underscores the financial and reputational cost of customer remediation and regulatory scrutiny following pandemic-era operating decisions. It also reinforces the expectation that listed companies price and provision for consumer-law risk in the same way they do for safety or operational exposures, with boards overseeing remediation strategies and public disclosures.
Qantas’ treatment of credits and refunds over the 2020-2022 period prompted parallel regulatory action: the Australian Competition and Consumer Commission oversaw a separate 2024 enforcement outcome that resulted in penalties and a remediation program focused on customers who were denied, or delayed in receiving, refunds. For more on Qantas’ group structure and business lines, see Qantas’ corporate site. For the regulator that pursued the 2024 action and enforces Australia’s competition and consumer laws, see the Australian Competition and Consumer Commission.
Legal and regulatory framework
The Federal Court of Australia handles class actions and must approve any global settlement of the type reached here before notices are distributed and claims may be processed. Court approval is not automatic: judges are required to assess whether the settlement is in the interests of group members as a whole, taking into account estimated recoveries, risks of continuing the litigation and deductions for fees and costs.
Court orders will be sought to notify group members directly by email and SMS, outlining how to claim a share of the settlement if approval is granted. In addition to court-directed communications, information is typically made available through the law firm’s and the airline’s customer-support channels to help passengers understand eligibility and process.
Echo Law’s claims focused on alleged contraventions of Australian consumer law arising from the withholding of refunds in 2020 when large numbers of services were cancelled as international and domestic travel was restricted. Australia’s principal consumer statute, the Australian Consumer Law, includes prohibitions on misleading or deceptive conduct and unconscionable conduct, as well as guarantees governing the supply of services such as air travel. Under the settlement terms, Qantas did not admit liability.
Precedent and industry relevance
The case is part of a wider pattern of legal and regulatory scrutiny of airline refund practices during the Covid-19 pandemic, as carriers globally grappled with unprecedented volumes of cancellations and cash-flow pressure. Within Australia, the Qantas resolution follows the group’s separate 2024 outcome with the consumer watchdog and sits alongside ongoing litigation against Jetstar over vouchers, signalling that credit-based responses to mass cancellations remain a live legal and policy issue.
For the broader aviation and travel sectors, the settlement clarifies one route for reconciling large-scale customer remediation claims through the class-action mechanism and court-supervised notice and claims processes, rather than through purely voluntary refund programs. It also sends a signal to airlines and other service providers that aggressive use of credits in place of refunds can carry multi-year legal, regulatory and reputational consequences.
The Federal Court must now consider the settlement for approval and, if approved, issue the orders that will trigger formal notification and the claims administration process. Qantas has indicated the cash impact will be recognised in the first half of the 2026/27 financial year, and court-directed notice to affected customers will precede distribution of payments, closing one of the most politically and commercially sensitive chapters of the airline’s pandemic-era response.
