Qantas has reached an agreement with the Australian Competition and Consumer Commission (ACCC) to settle a lawsuit against the airline for selling seats on flights that had already been cancelled.

Under the settlement, Qantas will institute a remediation program for affected passengers, with payments ranging from $225 for affected domestic customers to $450 for international customers, which are expected to total about $20 million.

“It’s expected to be around 87,000 consumers, who were the ones who were sold tickets on flights that Qantas had already decided to cancel,” ACCC chair Gina Cass-Gottlieb told ABC News.

The ACCC said these payments are additional to any remedies already offered by Qantas, such as alternative flights or refunds.

Subject to the approval of the Federal Court of Australia, Qantas will also pay a $100 million civil penalty to the federal government for breaching the Australian Consumer Law.

In a statement announcing the settlement, Ms Cass-Gottlieb described the airline’s conduct as “egregious and unacceptable”.

Given the circumstances and the inconvenience and loss incurred by many customers as a result of Qantas’ failures, Associate Professor Katherine Kemp from UNSW’s Faculty of Law and Justice, said the penalty could have been bigger.

“It is a significant penalty but I think Qantas is, in fact, fortunate in this case that it’s not a much bigger penalty,” she told ABC News.

“This penalty, that’s been proposed at least by the ACCC and Qantas, will take into account Qantas’ cooperation on this and so there may be a significant discount for that. But the ACCC was originally seeking a much higher penalty than this.”

Dr Kemp said there is still a chance the Federal Court may reject the proposed settlement amount and impose a larger fine.

“So, most of the time, we see that the Federal Court makes an order for the same or similar penalty. But there have been cases in the past, including the very high profile case against Volkswagen, where there was a very different and much larger penalty imposed by the Federal Court.”

Qantas promises ‘quick and seamless’ payments, next financial year

Qantas said it intends to commence the remediation program in advance of the court approval process and will recognise the costs as an expense in its full-year accounts, although the money for the fine and remediation is not expected to be paid out until next financial year, after June 30.