Jetstar faces lawsuit over failed COVID refunds

Proceedings against Jetstar Airways have been lodged in the Federal Court in Australia on behalf of hundreds of thousands of Jetstar customers whose flights were cancelled during the COVID pandemic. It is alleged that Jetstar failed to refund customers’ payments for those flights, despite being legally obliged to do so. The claim was served upon Jetstar Wednesday morning. “Jetstar promotes itself as a values-driven, low fare airline committed to helping ‘more people fly, more often’, yet it’s a highly profitable part of the Qantas Group, and when COVID caused widespread flight cancellations it put those profits ahead of its customers’ interests,” says Andrew Paull, Partner Echo Law. “Jetstar customers were pushed into holding hundreds of millions of dollars in restricted travel credits, even though this wasn’t what those customers had agreed to as part of the airline’s terms and conditions. The right thing for Jetstar to do when it cancelled all those flights was to return its customers’ money without delay.” Echo Law commenced a separate class action against Qantas in 2023 over its COVID credits program, which is ongoing. Both that class action and the action launched today against Jetstar seek refunds and compensation for customers, though the legal underpinning of the claims differs based on the different terms and conditions applicable to each airline. “Like Qantas, we allege Jetstar breached the law by failing to be transparent and by failing to refund its customers. It held onto ordinary Australian’s money and expected customers to just be happy with credits, which we allege it was not entitled to do. It now needs to be held accountable and refund that money with interest,” Paull said. “While customers sat at home not able to enjoy the benefits of flying, Jetstar enjoyed the significant financial benefits of holding hundreds of millions of dollars in customer payments including interest and reduced borrowing costs. It is unfair, and we allege unlawful, that Jetstar profited from holding onto its customers’ money for flights it had cancelled. Many Jetstar customers ended up paying the airline more than their original booking to use their credits on new fares, as they were led to believe they had little choice but to do that or else lose the value of the flights they paid for. This is another unjust enrichment Jetstar has enjoyed.” The allegations against Jetstar laid out in the action include that: The COVID travel restrictions ‘frustrated’ Jetstar travel contracts, causing these contracts to be automatically terminated and giving customers a right to automatically recover money paid under those contracts. Under Australian law, an event is ‘frustrating’ if it occurs without default of either party and renders the performance of contractual obligations impossible or radically different from what was originally contemplated. Jetstar’s failure to issue refunds was a breach of contract. Jetstar engaged in misleading or deceptive conduct in contravention of Australian Consumer Law, by misleading customers as to their rights in the event of widespread COVID cancellations. By holding customer’s funds that ought to be refunded, Jetstar attained unlawful financial benefit (including from the interest accrued). Jetstar have engaged in a system or pattern of unconscionable conduct in contravention of Australian Consumer Law. This action is funded by Court House Capital, an experienced Australian-based litigation funder. “We are pleased to be funding this action through Echo Law. Class actions allow members of the community the opportunity to access justice and to be compensated for wrongs done to them by larger, well-resourced organisations,” said Michelle Silvers, CEO and Director at Court House Capital. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Kay Rolland at [email protected]