Qantas Offers Free Flights to Customers Disrupted by Grounding of Fleet

By Tracy Withers - Nov 6, 2011 5:43 AM GMT+0700

Qantas Airways Ltd. (QAN), Australia’s biggest carrier, is offering free flights to passengers disrupted when it grounded its fleet for two days a week ago.

Customers are entitled to a free return economy flight within Australia or to New Zealand over a two-year period from Dec. 14, the Sydney-based airline said in a statement today.

“Throughout the long period of industrial activity we have been acutely aware of the impact on our customers,” Qantas Chief Executive Officer Alan Joyce said in the statement. “This ticket offer is one of a range of initiatives we will be launching as a way of saying sorry.”

About 80,000 passengers were stranded when Qantas grounded 108 aircraft that fly from 22 airports worldwide on Oct. 29 in an attempt to end labor union strikes. Australia’s industrial- relations regulator ordered an end to the stoppages and flights resumed Oct. 31.

The disruption cost Qantas A$68 million ($71 million), the airline has said. The offer of free flights may cost the carrier as much as A$20 million, the Sydney-based Daily Telegraph newspaper reported today.

Qantas has agreed with regulators that customers will be compensated for all reasonable losses arising from the grounding, and will be contacting affected customers, the airline said.

Rewarding Loyalty

“We deeply regret the inconvenience caused over recent months and last weekend in particular,” Joyce said. “Now that no more industrial action can take place and the cloud of further strike action has lifted, we are 100 percent focused on what matters to customers, getting them to their destinations, safely, on time and in comfort, and in rewarding their loyalty to Qantas.”

Further announcements will be made in relation to overseas- based customers and frequent fliers, the airline said.

The grounding of the fleet was the only alternative because the labor disputes were causing a slump in sales for the airline, Joyce told an Australian Senate Committee hearing on Nov. 4. Weeks of sporadic strikes caused a “massive” collapse in corporate bookings in October, he said.

Fair Work Australia, the nation’s labor regulator, ordered an end to union actions, barred Qantas from staging a planned lock out and gave both sides until Nov. 21 to agree to new contracts or face the possibility of compulsory arbitration.

Prime Minister Julia Gillard said on Oct. 31 the airline took an “extreme” approach by grounding its fleet. Australians and the tourism industry were “grossly inconvenienced by this high-handed ambush,” Assistant Treasurer Bill Shorten said a day after the grounding.

Qantas engineers and baggage handlers have staged stoppages seeking higher pay and job-security measures. Long-haul pilots have also held protests in a bid to get the same employment conditions whether they fly for Qantas’s namesake carrier or planes from its budget arm Jetstar.

Qantas rose 2.5 percent to A$1.615 at the close of Sydney trading on Nov. 4. The carrier rose 4.5 percent last week, compared with a 1.7 percent decline for the benchmark S&P/ASX 200 Index.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net