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In a landmark case that could reshape consumer rights in the airline industry, Jetstar Airways Limited is facing a class action lawsuit in Australia’s Federal Court. The legal action, initiated by hundreds of thousands of Jetstar customers, aims to recover refunds and compensation for flights cancelled during the COVID-19 pandemic. The airline is accused of unlawfully retaining hundreds of millions of dollars in customer payments, described as a blatant disregard for consumer rights.

Jetstar, a subsidiary of the Qantas Group, has long marketed itself as a values-driven, low-cost airline, promising to make air travel accessible to more people. However, according to the plaintiffs, the company prioritized profit over its customers’ rights when it pushed them into accepting restricted travel credits instead of providing the refunds they were legally entitled to. Andrew Paull, Partner at Echo Law, who leads the case, asserts that Jetstar’s actions were unethical and illegal under Australian law.

“Jetstar’s public image as a customer-friendly, low-fare airline is contradicted by its actions during the COVID-19 crisis,” said Paull. “When the pandemic forced widespread flight cancellations, Jetstar should have immediately refunded its customers. Instead, they chose to retain customer funds, offering restricted travel credits that many customers neither wanted nor agreed to under the airline’s original terms and conditions.”

This is not the first time Echo Law has taken on a major airline. In 2023, the law firm launched a similar class action against Qantas, focusing on its COVID credits program. While the two cases share similarities, Paull emphasizes that the legal grounds differ due to each airline’s terms and conditions.

The crux of the allegations against Jetstar includes several serious claims:

Breach of Contract: The lawsuit alleges that Jetstar violated its contractual obligations by failing to issue refunds for cancelled flights, instead offering travel credits that many customers found difficult to use.
Misleading Conduct: The airline is accused of misleading and deceptive practices, violating Australian Consumer Law, by not informing customers of their right to a refund when flights were cancelled due to COVID-19.
Unlawful Financial Gain: Jetstar allegedly gained significant financial benefits by holding onto customer funds that should have been refunded, including interest on the retained funds and reduced borrowing costs.
Unconscionable Conduct: The lawsuit further claims that Jetstar’s behaviour amounted to a system or pattern of immoral conduct, again contravening Australian Consumer Law.

The concept of ‘frustration’ under Australian contract law plays a central role in the case. When an unforeseen event, like a pandemic, makes performing a contract impossible or radically different, that contract is considered ‘frustrated’ and automatically terminated. The plaintiffs argue that Jetstar’s failure to refund payments following the frustration of travel contracts constitutes a clear breach of contract.

Adding to the controversy, many customers were allegedly forced to pay more than their original booking amounts to use the restricted credits on new fares. This, Paull argues, resulted in further unjust enrichment for Jetstar at the expense of its customers.

“Jetstar took advantage of ordinary Australians during an unprecedented global crisis,” Paull added. “While their customers were grounded at home, unable to travel, Jetstar was sitting on hundreds of millions of dollars of their money, profiting from it. This is not just unfair; it is, we allege, unlawful. Jetstar must be held accountable.”

Court House Capital, a respected Australian litigation funder, funds the class action. Michelle Silvers, CEO and Director of Court House Capital, emphasized the importance of class actions in holding large corporations accountable. “We are committed to ensuring justice is served for the countless Jetstar customers who were wronged during the pandemic. This case is about more than just money; it’s about fairness and corporate responsibility.”

Jetstar customers who wish to participate in the class action can register their interest at www.echolaw.com.au/jetstar.

As the case progresses, it could set a significant precedent for how airlines and other corporations handle consumer rights in times of crisis. The outcome could also influence future legal actions and consumer protections in Australia and globally.