Jetstar accused of wrongly denying refunds for cancelled Covid flights

Jetstar is facing a class action lawsuit that could result in hundreds of millions of dollars in payouts after it was accused of wrongfully denying refunds for cancelled flights during the Covid-19 pandemic.

The budget airline offered travel credits with restrictive conditions instead, leaving many customers feeling stranded.

Echo Law, a firm based in Melbourne leading the lawsuit, alleged Jetstar breached consumer law by not offering refunds when flights were cancelled during the 2020 lockdown.

"The correct thing for them to do under the law was to give people their money back. What they chose to do was to put their profits ahead of customers,” said partner Andrew Paul.

"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."

One affected customer, Yamur Sadiqi, said he felt "held to ransom" with no choice but to accept the travel credits.

"At the time, I was struggling and needed the money for other things," he said.

Paul claimed hundreds of thousands of people were also put in the same position during the pandemic when income was critical.

The class action suit alleged Jetstar held on to customer payments, earned interest and reduced its borrowing costs at the expense of those who needed their money back.

In a statement, Jetstar said it was reviewing the claims and noted that it had already removed expiry dates for Covid vouchers, allowing them to be used indefinitely.

"These vouchers are also multi-use, meaning they can be used across multiple bookings and for multiple people."

Jetstar’s parent company, Qantas, was already heading to mediation over a similar case brought by the same law firm.

Last year, the case led to intense scrutiny of executives from both Qantas and Jetstar in the Australian Senate.

During a hearing, former Qantas CEO Alan Joyce was grilled by a Senator who questioned the airline’s practices during the pandemic.

"You have put an arbitrary deadline of December this year when people lose that money and the money stays in the pockets of Qantas and Jetstar and you're seriously telling the Australian public that you don't know how many tens of millions of dollars are involved above that $370 million?” Labor senator Tony Sheldon asked.

Joyce responded: "Since March 2020, $3 billion in refunds have been granted."

At the time, Jetstar chief executive Steph Tully also defended the airline, saying, "I don't expect you to understand the complexity of an airline ticketing system."

Anyone who received a credit for a cancelled flight between 2020 and 2022 has been automatically included in the latest class action against Jetstar, Echo Law said.

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