Southwest Airlines agreed to a record-setting $140 million civil penalty over the December 2022 holiday meltdown that led to 16,900 flight cancellations and stranded 2 million passengers.
The U.S. Department of Transportation (USDOT) consent order resolves a lengthy government investigation into the massive travel disruption and provides ‘a strong deterrent,’ the agency said.
The settlement includes a $35 million cash fine and a three-year mandate that Southwest provide $90 million in travel vouchers of $75 or more to passengers delayed at least three hours getting to final destinations because of an airline-caused issue or cancellation.
The first-of-its-kind U.S. delay compensation program, which will start by April, is part of the Biden administration’s aggressive efforts to get tough on airlines as it aims to require new passenger compensation. Vouchers will be awarded ‘upon request,’ Southwest said.
‘If airlines fail their passengers, we will use the full extent of our authority to hold them accountable,’ said Transportation Secretary Pete Buttigieg.
The 2022 massive winter storm and subsequent chaos prompted travel horror stories: people missing funerals or long-awaited holiday gatherings, passengers with canceled flights forced to make cross-country drives of 17 or more hours across and some cancer patients could not get treatment.
One senior executive told angry lawmakers bluntly: ‘We messed up.’
Southwest, which paid over $600 million to passengers impacted by the storm that cost it more than $1 billion, has made significant technology and consumer service upgrades and other investments including de-icing equipment across its network. The airline has seen significant operational improvements this year.
Southwest did not admit to wrongdoing but agreed to the settlement to avoid litigation and said Monday it was ‘grateful to have reached a consumer-friendly settlement’ with USDOT and now ‘can shift its entire focus to the future.’
The prior largest penalty was $4.5 million imposed on Air Canada after USDOT initially sought $25.5 million. Southwest’s penalty – which includes the $35 million fine payable over three years – is more than all penalties assessed by USDOT combined since 1996. USDOT said in January it planned to start seeking higher fines.
Airlines have sparred with the Biden administration over responsibility for flight delays, landing slots and consumer issues. Buttigieg said in July of airlines: ‘We’re going to beat’em up when we think that’s important to get passengers a better deal.’
USDOT found Southwest violated consumer protection laws by failing to provide adequate customer service assistance ‘via its call center to hundreds of thousands of customers’ as well as failing to provide prompt flight status notifications to more than 1 million passengers and prompt refunds to thousands of impacted travelers.
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