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The airline has a lot of work to do to repair its reputation and rebuild trust among Australians who just want fair fares.
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Ticket to ride? Qantas compliance record crashes and burns
13 October 2023
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The issues plaguing Qantas should serve as a reminder to business about the importance of compliance. Consumers rarely consider compliance when transacting with a business because it is assumed the organisation will fulfil its end of the bargain. When booking a flight, for example, the unwritten social contract with consumers dictates that the flight in question should not have already been cancelled a fortnight earlier.
The anger at Qantas is understandable and it has resulted in an earlier-than-planned retirement of its CEO and, this week, news that its chairman will go next year. Qantas, you will recall, sold more than 8,000 seats on flights that had already been cancelled and that led to a lawsuit from the ACCC. The suit alleges Qantas sold these tickets for, on average, two weeks and as long as 47 days after it had already cancelled the flights internally, which the ACCC contends caused confusion, higher costs and delays for travellers.
But phantom flights are just the tip of the iceberg. It was also holding more than $500m in flight credits that had contributed to its bottom-line result – although reportedly, it had failed to inform many customers of their credits.
Australians are fed up, and Qantas is not the only one with issues like this recently. KPMG was accused by Four Corners of overcharging Defence (which both KPMG and the department have denied); retailers such as Uniqlo have admitted underpaying staff; and restauranteurs across the country have repeatedly underpaid employees running into millions.
But as the national carrier of Australia, once a source of pride (do you remember smiling when Dustin Hoffman told Tom Cruise in Rain Man that Qantas had never had a crash?), Aussies feel this specific drama more deeply. The sad thing is that, even without knowing the inner machinations of Qantas’s systems, this probably could have all been avoided.
Compliance, when it comes to supplier or customer engagement, is simple on paper: in basic terms, it ensures that terms and agreements are met between a company and its suppliers or customers. This includes items that are “on sale”, refund terms, credit allocations and more. It requires cross-referencing sale terms with transactions to ensure both sides of the ledger have met in the middle as agreed. In years gone by this was much more complex, requiring the manual cross-referencing of spreadsheets with contract fineprint. Now, everything is digital.
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With proper and effective contractual compliance measures, systems and processes in place, even the most complex e-commerce systems can avoid instances such as those experienced by Qantas. In theory, non-compliance should be rare in 2023 – but it feels like we’re seeing more non-compliance-related headlines hit the front pages than ever before.
Did Qantas have the proper systems in place? It’s hard to say, but let’s look at their issues and whether they could have been avoided.
For every cancelled flight, a credit for anyone who has purchased it is – or should be – issued, with customers informed immediately and contacted regularly to advise that they have credits to claim, with clear terms outlined as to any expiry dates to claim such credits.
All that is required is a standard electronic direct mail to affected customers, text messages or even letters, something most modern organisations are well equipped to do. After all, there’s no shortage of emails sent when it’s our debt to pay. This can be easily automated to a targeted list of credit-eligible customers only – a list that itself can be populated automatically.
Next, travel agents, backend systems and direct sales agents need to be informed of cancellations so tickets aren’t sold for services that don’t exist. This one seems so obvious, but it clearly did not happen here.
Now, Qantas is exposed to the ACCC lawsuit and angry customers, who most likely rebooked flights at greater cost and closer to the date of travel, as well as risking their deposits on accommodation, car rentals and other expenses.
There needs to be an automated process, one in which the cancellation of a flight automatically prevents any future purchases for that flight. With everything digitally recorded, there is simply no excuse for this not being standard practice. With the proper systems in place and a focus on clear transactional processes and compliance, this issue should never occur.
Qantas now has a lot of work to do to repair its reputation and rebuild trust among Australians who just want fair fares. They can start to ensure customers that “this won’t happen again” by looking at their systems and processes to see what went wrong.
Sadly, Australians are becoming all too accustomed to headlines featuring overcharges or underpayments from businesses. Organisations need to get their houses in order and ensure that all transactional processes are compliant, and accuracy is at the heart of everything they do.
Tony Horn is the executive general manager of operations for Profectus Group.
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