The consumer watchdog hopes Qantas will be dealt a record fine for a consumer law breach if its allegations about the airline’s cancelled advertised tickets prove correct.

Australian Competition and Consumer Commission chair Gina Cass-Gottlieb would like to see Qantas pay more than double the $125 million record penalty Volkswagen was slapped with in 2019 for misleading customers over vehicle emissions.

The ACCC has launched Federal Court action, claiming the troubled airline engaged in false, misleading or deceptive conduct after continuing to sell thousands of tickets on flights that had already been cancelled.

The watchdog is seeking penalties, injunctions, declarations and costs.

Ms Cass-Gottlieb said penalties for failing consumers were generally too low and the watchdog would seek a fine that would deter future offences.

“We are going to seek [a] penalty that will underline that this is not just to be a cost of doing business,” she told ABC radio on Friday.

If the case against Qantas succeeded, Ms Cass-Gottlieb said she would hope for twice the existing penalty record for a consumer law breach – amounting to a $250 million fine.

The case brought by the ACCC follows a tough week for Australia’s national carrier, with Qantas boss Alan Joyce forced to fend off a range of criticisms at a parliamentary hearing.

He faced questions over the airline’s record $2.5 billion profit, high ticket prices, as well as the issue of millions of dollars in outstanding flight credits that would have gone straight to its bottom line if left unclaimed.

In response to public backlash, the airline moved on Thursday to scrap expiration dates on its unredeemed flight credits.

Qantas’ role in the federal government’s decision to block Qatar Airways from flying extra routes has also come under heavy scrutiny, with the Australian airline understood to have lobbied against the additional flights.

On Friday, pressure also came from within Labor. Former treasurer Wayne Swan, now ALP national president, told the Nine Network that the Qatar decision should be reviewed in light of the accusations about Qantas’ ticket sales on ghost flights.

“An appropriate review where things are, given all these revelations, would be good,” Mr Swan said.

“We have price gouging, and deceptive conduct, and real questions to be answered by Qantas.”

Also on Nine, Nationals senator Bridget McKenzie said the government “has been caught napping at the wheel”.

The federal government has also been forced to defend the scope of an upcoming white paper into the airline sector amid concerns it may not tackle competition issues, which are thought to be pushing up ticket prices.

Opposition Leader Peter Dutton said the Qatar decision would force up prices.

“The fact is that Qatar was excluded from participating, that means that because of the decision the Prime Minister’s made, every time you book to go and see your family member in Europe or in Asia or America, you’re paying literally thousands of dollars more for the ticket than you would otherwise need to,” Mr Dutton told Nine.

Deputy Prime Minister Richard Marles said improving competition was at the heart of the upcoming aviation white paper, due in the first half of 2024, and the government’s broader approach.

“Every airline needs to lift their game and make sure that they are engaging in the best possible service for their customers, and that very much includes Qantas,” he said.

-with AAP