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Qantas flight credit policy unfair to customers

CHOICE has filed a complaint with the ACCC calling out undue restrictions in Qantas's credit redemption rules. 

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Last updated: 12 April 2022
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Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • Qantas is currently holding about $1.4 billion dollars in unused flight credits and future bookings 
  • Customers can only use their credits for flights that cost the same or more than their original fare if they originally booked after 30 September 2021 
  • If a flight costs less than their credit, the customer must buy it from scratch

A series of CHOICE surveys over recent months, asking people questions about travel cancellations, have made one thing clear: many have hit obstacles when trying to use the Qantas flight credits they were given in place of refunds. 

Others haven't been able to use them at all.

As of late February this year, Qantas and its budget carrier Jetstar were holding a total of $1.4 billion in unused flight credits and future bookings. 

According to the airline, only about seven percent of Qantas credit holders have used their credits. For Jetstar, the figure was about 19%. 

Unfair terms and conditions on credit redemptions 

One reason for the low uptake may be the conditions Qantas had imposed on how credits can be used. 

Customers can only use their credits for flights that cost the same or more than their original fare if they booked it after 30 September 2021. 

If they want to book a flight that costs less, they have to buy a whole new ticket – a significant restriction that could be affecting a lot of people. 

Customers holding credits for international flights don't have the option of spreading the credits across several domestic flights

For instance, if you have a $500 credit for a Sydney to Melbourne flight and the price is now $475, you wouldn't be able to use the credit, even if you waived the $25 loss. Instead, you'd have to buy a new ticket and leave your credit untouched.

And customers holding credits for international flights don't have the option of spreading the credits across several domestic flights if they booked after 30 September 2021. 

Some of these customers, for reasons such as advanced age or declining health, may no longer plan to fly internationally. 

Expiry dates looming

Given that credits issued after 30 September 2021 expire after 12 months, people could easily get stuck in this trap every time they try to book a new flight between now and then, until their credits expire (unless their fare conditions allow for a refund).

CHOICE has filed a complaint with the ACCC calling out potentially misleading and deceptive conduct in Qantas's credit redemption policy. 

The difficulties so many customers are having redeeming their flight credits raises a question: was Qantas clear with customers about the ins and outs of its credits policy when it issued them? It appears it may not have been. 

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Flight cancellations became an all-too-familiar experience for travellers over the past two years.

Faulty credit redemption system 

Aside from the potentially unfair terms, Qantas customers have reported many problems in trying to use their flight credits. 

"The online system at Qantas would not accept the credit number," one customer says. "It was a faulty system. I had to pay for new flights again and spend days on numerous calls to obtain a refund, which then took 12 weeks to actually happen." 

"Qantas couldn't retrieve my credit voucher details so I couldn't use it," another customer reports.

Another says, "I spent 10 hours or more trying to rectify a travel voucher error with Qantas. They double-billed me initially. I finally had the overcharge refunded and then was given a credit voucher for the flight when it was cancelled. 

I spent 10 hours or more trying to rectify a travel voucher error with Qantas

"When I tried to use the voucher 10 months later it said it was not valid. I spent hours on the phone trying to talk to someone at Qantas about their error. No one could understand what had happened and [they] insisted I had already been refunded the fare."

Other customers simply couldn't get through by phone. "Qantas makes it so hard to access support that people just give up," one customer tells us. "I believe this to be deliberate."

(In October last year, our Qantas call wait times investigation highlighted the frustrations of many customers left on hold.) 

Qantas calls its policy 'generous'

Qantas CEO Alan Joyce took a different view of the airline's credit system when reporting its half-year results in February this year.

He said: "People have through until December 2023 to use any outstanding flight credits and they can use them either on domestic or international flights. It's the most generous policy we've had on credits and it's great to see people starting to use them as travel comes back."

Is it legal to hold customers' money for so long? 

The ACCC has gone on record to say that a travel customer's refund rights depend on the terms and conditions of their booking agreement. 

Addressing the issue in March 2020, ACCC chairman Rod Sims acknowledged that government restrictions on travel may affect consumer guarantees, asking people to be patient with small and medium size businesses. 

But he was unequivocal on the main point, especially with regard to very large businesses such as Qantas: "Failure by any business to honour its cancellations or refunds policy may constitute misleading conduct under the Australian Consumer Law," he said. 

Qantas's standard terms and conditions from March 2020 state the matter plainly: "You will be entitled to a refund if we are unable to carry you and you have a confirmed reservation."

A COVID loophole?

Yet a special "coronavirus travel update'' issued at the same time makes no mention of refunds, saying customers are entitled to flight credits. (Some Qantas fares are simply non-refundable, however, and refund rights can depend on whether cancellations were due to government restrictions.)

In an industry best practice guide released in July 2020, the ACCC states that businesses "must not impose restrictions, such as requiring consumers to accept credit notes instead of refunds, except where expressly permitted to do so by applicable terms and conditions".

Instead of refunds, many Qantas customers have been given flight credits that they have found very difficult, if not impossible, to use

Instead of refunds, many Qantas customers have been given flight credits that they have found very difficult, if not impossible, to use. (In July 2021, we reported that fewer than one in five (17%) of the 4295 people we surveyed had received a refund for a travel cancellation.)

We asked Qantas why it wasn't issuing refunds according to the terms and conditions that applied when people booked, but the airline didn't respond to the question. 

The COVID-19 pandemic has made for extraordinary times in the travel industry, but does that justify Australia's biggest airline making credit redemption so difficult?

frustrated_customers_at_check_in_gate

Many Qantas customers have reported that buying a flight with a credit costs more than buying a new ticket on the same flight.

No longer able to fly 

Aside from the issues of Qantas credits expiring before customers have been able to use them, or customers having to pay extra to use a voucher for the same booking, many voucher holders no longer feel up to flying. Others no longer have a reason to. 

Their credits are now worthless to them, but for Qantas they're still money in the bank.

Qantas promised I could use the credit, but when time came, put in many restrictions

"Qantas promised I could use the credit, but when time came, put in many restrictions," one customer tells us. "I had a credit to travel from Adelaide to Canberra, returning from my mother's funeral. Qantas advised I could only use the credit for the same journey. I will never again travel to Adelaide."

Another customer, who was hoping to get their money back from Qantas and other carriers, says, "I'm too old to travel comfortably now and requested refunds in lieu. Those refunds were denied."

Having to pay extra 

In January this year, we ran a national survey about flight cancellations and credits. We found that nearly a third of people who were able to use their flight credits had to pay more than the original cost of the flight. 

The survey also showed that more than one in five people (21%) who tried to use a flight credit or voucher say they were unsuccessful. Many also reported that paying with a credit costs more than buying a new ticket for the same flight. 

One Qantas customer we heard from in March 2020 said the airline agreed to cancel her flight and waive the $99 flight-change fee due to the worsening pandemic. 

I was able to get a flight credit, but the flight ended up costing me about $200 more than if I had booked it outright

But when she actually got her voucher, it came with terms and conditions that reneged on that promise. 

"Qantas also suggests there could be other fees, and that I should check with my original booking," she says. "I am finding it extremely difficult to locate any information regarding fees attached to the original booking."

'How can Qantas get away with that?'

In March, a Qantas customer told us, "I was able to get a flight credit, but the flight ended up costing me about $200 more than if I had booked it outright. Very disappointing. How can Qantas get away with that?"

Summing up the views of many Qantas customers we've heard from, another customer told us in January this year: "Fundamentally I would argue that these funds are not the airline's and should be kept in an independent trust account." 

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