'Egregious': Qantas to pay customers up to $450 for cancelled flights

Qantas has reached an agreement with the national business watchdog to pay $120 million in penalties and repayments after misleading customers about cancelled flights.

The Australian Competition and Consumer Commission (ACCC) said Qantas would be compelled by the court to pay $20 million to more than 86,000 customers who were sold tickets on services that were slated to be cancelled.

In some cases customers were booked on the planes after their original flights had been cancelled despite the Australian airline knowing the service would not run, ACCC said.

Qantas has agreed to pay $225 to domestic ticket holders and $450 to international ticket holders in addition to repayments or alternative flights customers may have already received from the airline.

"We are pleased to have secured these admissions by Qantas that it misled its customers, and its agreement that a very significant penalty is required as a result of this conduct. The size of this proposed penalty is an important milestone in enforcing the Australian Consumer Law," ACCC Chair Gina Cass-Gottlieb said.

"Qantas' conduct was egregious and unacceptable. Many consumers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled," she said.

"We expect that this penalty, if accepted by the Court, will send a strong deterrence message to other companies.

"Importantly, it demonstrates that we take action to ensure that companies operating in Australia communicate clearly, accurately and honestly with their customers at all times."

Under the agreement Qantas admitted that misleading representations were made to customers over flights the airline has decided to cancel.

Qantas committed to ensuring customers received payment and the airline said it would "not engage in this type of conduct in the future".

The airline also agreed to make joint submissions on the proposed $100 million penalty to the Federal Court. The penalty will be determined by the court after the hearing.

Qantas has also agreed to pay a contribution towards the ACCC's costs.

Qantas Group CEO Vanessa Hudson said "today represents another important step forward as we work towards restoring confidence in the national carrier".

"When flying resumed after the COVID shutdown, we recognise Qantas let down customers and fell short of our own standards," she said.

"We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry.

"The return to travelling was already stressful for many and we did not deliver enough support for customers and did not have the technology and systems in place to support our people."

The ACCC have warned customers that scammers have been calling people and posing as Qantas staff tasked with organising the repayments.

Scammers may be using the ACCC media release to convince customers of the scam's legitimacy, the watchdog warned.

"If you receive a call from anyone offering to help you with a payment or refund, hang up immediately," the ACCC warning read.

"Never give personal information to anyone calling you out of the blue, never give access to your computer or bank account and never click on a link in a text message or open an attachment in an email if you were not expecting the text or email."

If you have given information to a scammer or lost money, contact your bank immediately. Report scams to Scamwatch