Australia regulator sues Qantas alleging sale of tickets on cancelled flights

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 Qantas aircraft are seen on the tarmac at Melbourne International Airport in Melbourne

Qantas aircraft are seen on the tarmac at Melbourne International Airport in Melbourne, Australia, November 6, 2018. REUTERS/Phil Noble//File Photo Acquire Licensing Rights

SYDNEY, Aug 31 (Reuters) - Australia's competition regulator sued Qantas Airways (QAN.AX) on Thursday, accusing it of selling tickets to thousands of flights after they were cancelled, putting the airline at risk of huge fines and reputational turbulence.

The Australian Competition and Consumer Commission (ACCC) said in a court filing that the carrier broke consumer law when it sold tickets to more than 8,000 flights between May and July 2022 without disclosing they had been cancelled.

The airline kept selling tickets for an average of 16 days after it had cancelled flights for reasons often within its control, such as "network optimisation", the ACCC added. Qantas kept selling tickets to one Sydney-to-San Francisco flight 40 days after it had been cancelled, the regulator said.

The maximum penalty Qantas faces is 10% of annual turnover, which was A$19.8 billion in the year to June, although the ACCC did not specify an amount.

The ACCC lawsuit "could be detrimental for the Qantas brand, which has had a bit of a tough patch lately in any case," said Rico Merkert, deputy director of Sydney University's Institute of Transport and Logistics Studies.

After the country reopened its border in late 2021, Qantas bore the brunt of complaints about flight cancellations, lost luggage and long airport lines as transport operators around the world struggled to find staff.

At an Australian Senate hearing this week, Qantas CEO Alan Joyce, who will retire in November after 15 years, confirmed the airline had nearly A$500 million in unused credits for cancelled flights that would expire in December.

The Sydney Morning Herald reported on Thursday that Qantas was scrapping the 2023 deadline. Qantas did not immediately respond to a Reuters request for comment.

Joyce also confirmed at the hearing that Qantas had written to the federal government in 2022 asking it to deny a request from Qatar Airways, a Qantas competitor on international routes, to increase flights to Australia. The government denied the extra Qatar flights.

"Reliable air travel is essential for many consumers in Australia who are seeking to visit loved ones, take holidays, grow their businesses or connect with colleagues," said ACCC Chair Gina Cass-Gottlieb in a statement.

Qantas said it would review the ACCC's allegations and respond in court. It noted that the period examined by ACCC was a time of "unprecedented upheaval for entire airline industry."

Reporting by Byron Kaye in Sydney and Poonam Behura in Bengaluru; Editing by Shailesh Kuber, Rashmi Aich and Gerry Doyle

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