Qantas share price dives on a horror Thursday

The airline backflips after public outrage about it pocketing customers' money in return for no service.

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Qantas Airways Limited (ASX: QAN) shares are tumbling over 2% on Thursday after the airline continued its turbulent week with two massive developments in the morning.

After closing Wednesday at $6.03, the Qantas share price was trading at $5.88 at the time of writing on Thursday afternoon. This is a slight improvement on the airline stock's intraday low of $5.77.

The two big news bulletins on Thursday morning were that the consumer watchdog is taking Qantas to court to accuse it of selling tickets to cancelled flights, and the airline announcing the removal of the expiry date on travel credits.

Customers still had more than $500 million worth of credits remaining with the airline after COVID-19 lockouts forced the cancellation of travel plans.

The company had been heavily criticised in recent weeks for making it difficult for customers to use or claim the credits as refunds, then planning to pocket any remaining balance at the end of the year.

Qantas on Thursday backflipped on that decision, in response to the backlash.

"If you have a Qantas COVID credit, you can request a cash refund at any point in the future. And if you have a Jetstar COVID voucher, you can use it for travel indefinitely," chief executive Alan Joyce said in a video to customers.

"We know the credit system was not as smooth as it should have been."

'A really bad decision'

Thursday's woes are just another chapter in a horrible week for the company. The Qantas share price has plunged over 6% since last Friday's close.

Earlier in the day, the Australian Competition and Consumer Commission (ACCC) started legal action in the Federal Court, alleging the airline advertised and sold tickets for more than 8,000 flights last year that it already knew were cancelled.

A further 10,000 cancelled flights saw ticket holders not promptly informed their flights would not take off, resulting in many customers spending hundreds of thousands on last-minute travel changes.

This followed Monday's senate enquiry where Joyce was grilled for Qantas' poor service levels, all while raking in historically high fares, receiving financial assistance from the government, and pocketing record profits.

That same day saw Assistant Treasurer Stephen Jones confessing that the federal government had rejected Qatar Airways' submission for more flights to Australia in order to protect Qantas.

The revelations outraged the tourism industry, economists, and the travelling public.

"It's a really bad decision by any standards, particularly when the government is talking about doing a competition review," former ACCC chair Alan Fels told ABC News Breakfast on Wednesday.

"This is going to put up prices, or keep them up a lot. They're 50% higher now than before COVID. They would come down a lot if Qatar entered."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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