Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
Southwest Airlines will pay a $35 million fine as part of a $140 million settlement to resolve a federal investigation into a debacle in December 2022 when the airline canceled thousands of flights and stranded more than 2 million travelers over the holidays.
Most of the settlement will go toward compensating future passengers, which the U.S. Department of Transportation considers an incentive for Southwest to avoid repeating last winter’s mess.
The government said the assessment was the largest it has ever imposed on an airline for violating consumer protection laws.
Transportation Secretary Pete Buttigieg said the settlement demonstrates his agency’s resolve to make airlines take care of their passengers.
“This penalty should put all airlines on notice to take every step possible to ensure that a meltdown like this never happens again,” he said.
Southwest said it was “grateful to have reached a consumer-friendly settlement” that gives the airline credit for compensation it already provided to customers. The airline said it has “learned from the event, and now can shift its entire focus to the future.”
The assessment stems from nearly 17,000 canceled flights a year ago, which started as a winter storm paralyzed Southwest operations in Denver and Chicago and then snowballed when a crew-rescheduling system couldn’t keep up with the chaos.
Even before the settlement, the nation’s fourth-biggest airline by revenue said the meltdown cost it more than $1.1 billion in refunds and reimbursements, extra costs and lost ticket sales over several months.
The government said in a consent decree dated Friday that Southwest “violated the law on numerous occasions,” including by failing to help customers who were stranded in airports and hotels, leaving many of them to scramble for other flights.
Many who called the airline’s overwhelmed customer service center got a busy signal or were stuck on hold for hours.
Southwest also did not keep customers updated about canceled and delayed flights, failing to fulfill a requirement that airlines notify the public within 30 minutes of a change. Some said they never got an email or text notice and couldn’t access Southwest’s website.
The government also charged Southwest did not provide refunds quickly enough. People who made a mistake entering details in refund requests to a special Southwest website were not told to fix the error; they simply didn’t get the money. Others didn’t receive immediate refunds for things like pet fees and boarding upgrades that went unused because of canceled flights, according to the department.
In the consent order, Dallas-based Southwest disputed many of the Transportation Department’s findings.
Southwest said that only a small percentage of refunds were issued late and that it never gave false promises about long wait times for reaching customer service during weather-related disruptions.
Still, the company said it entered the agreement just to settle the matter.
Southwest said the 2022 storm that produced record cold temperatures, blizzards and power outages a few days before Christmas created “unanticipated operational challenges.” The airline said it quickly began reimbursing travelers for meals, hotels and alternative transportation and also distributed frequent flyer points.
Southwest has added trucks and other de-icing equipment and will increase staff during extreme cold temperatures at key airports such as Denver, CEO Robert Jordan said.
Southwest had previously agreed to make more than $600 million in refunds and reimbursements. Still, the carrier disclosed in October that federal officials found its efforts fell short and the carrier could face a civil penalty over its service to customers.
The settlement provides that in addition to the $35 million fine, Southwest will get $33 million in credit for compensation already handed out, mostly for giving 25,000 frequent flyer points each, worth about $300, to affected customers. The company promised to give out $90 million in vouchers to future travelers.
Starting next spring and running until April 2027, Southwest will provide a voucher of at least $75 to travelers who request them if they reach their destination at least three hours late because of a delay or flight cancellation caused by the airline.
The government values vouchers at 80% of their face value, so Southwest received credit for $72 million for the future vouchers, not the full $90 million to be distributed over three years. If Southwest pays out less than $30 million in any of those years, it will owe the government a penalty of 80% of any shortfall.
In exchange for Southwest agreeing to the fine and other measures, the government stopped short of deciding whether the airline advertised a flight schedule that it knew could not be kept. Buttigieg had raised that charge publicly.
The Transportation Department said it reviewed thousands of consumer complaints, visited Southwest facilities and met with senior company officials during the investigation.
Please enable JavaScript to view this content.
The settlement provides that in addition to the $35 million fine, Southwest will get $33 million in credit for compensation already handed out, mostly for giving 25,000 frequent flyer points each, worth about $300, to affected customers. The company promised to give out $90 million in vouchers to future travelers.
Southwest snowmagedon is going to reward future travelers 3 times the amount of those who were inconvenienced, ain’t that special!
Steve R. Is right. This doesn’t make any sense. I used to really like Southwest but this makes me want to ignore them. The sad thing is that they are all pretty much the same in terms of service.
So how do I get some of the $35m in fines? I was a part of all of this mess and Southwest’s customer service was as bad as you could get. It isn’t just that the flights got postponed for 5-6 hours but that the staff knowingly lied to us as customers and then finally cancelled the flights late in each day. My flight on the 23rd was finally cancelled at 10:00 pm (flight was scheduled at 9:00 am) and then I spent my Christmas Eve and Christmas Day in an airport being lied to over and over again with staff saying “the flight is still active but just delayed”…over and over and over again. Then finally some truth came out of their mouths on the 26th when we were told that it might be until New Year’s Eve or New Years’ Day before flights would be available again. I then had the one way expense of renting a car and driving home 15 hours, paying for gas, hotels, food, etc…with no compensation. So, when you see videos of people yelling at the check in counter, at the gate, etc…give them some grace because although it isn’t the fault of the people at the check in counter…they are the ones continuously lying to people and they know it. Again, how do I get my fair share? My hotel, food, etc. over those 3 days in the airport plus my trip back to Indiana. I doubt I will ever see full compensation from the worst service industry in the world.