Roughly a year ago, in late 2022, Southwest Airlines had an unprecedented operational meltdown. During this, the airline canceled 16,900 flights, and stranded over two million passengers over the Christmas and New Year holiday.
The US Department of Transportation (DOT) made it clear that the airline would be held accountable for this, and we now know what that will look like.
In this post:
Southwest faces massive $140 million DOT fine
The DOT has announced a $140 million civil penalty against Southwest Airlines for its numerous violations of consumer protection laws during and after the operational failures that unfolded in late 2022. The majority of this penalty will go toward compensating future Southwest passengers impacted by cancelations or significant delays.
This penalty is 30 times larger than any previous DOT penalty for consumer protection violations. This is also in addition to the more than $600 million in refunds and reimbursement that the airline had to issue to customers in relation to the meltdown.
This fine comes after a long investigation on the part of DOT, which included examining tens of thousands of pages of documents, conducting in-person audits at Southwest’s headquarters, reviewing thousands of consumer complaints, and more.
Specifically, the DOT found that Southwest violated the following consumer protection laws:
- Failing to provide adequate customer service assistance; as hundreds of thousands of Southwest customers were stranded, customers were unable to get in touch with the airline, and were met with busy signals and hours-long queues
- Failing to provide prompt flight status notifications; Southwest failed to provide flight status notifications, even though the airline promises to keep consumers updated about flight status changes via text or email
- Failing to provide refunds in a prompt and proper manner; the DOT found that thousands of customers were not promptly refunded
Wait a second, aren’t those three points just how airlines operate in general? 😉
Here’s how US Transportation Secretary Pete Buttigieg describes the penalty:
“Today’s action sets a new precedent and sends a clear message: if airlines fail their passengers, we will use the full extent of our authority to hold them accountable. Taking care of passengers is not just the right thing to do — it’s required, and this penalty should put all airlines on notice to take every step possible to ensure that a meltdown like this never happens again.”
Southwest will have to compensate passengers for delays
In the United States, the government doesn’t ordinarily mandate any particular compensation for flight delays, unlike in some other jurisdictions. That will be changing, but exclusively for Southwest. As part of this settlement, Southwest needs to establish a $90 million compensation system for future passengers impacted by significant delays and cancelations.
In the event that Southwest causes a passenger to arrive at their destination three or more hours after their original scheduled arrival time due to an issue within the carrier’s control, Southwest is required to provide the passenger with a transferrable $75 voucher for future use on the airline.
That’s an interesting change to see, as it’s specific to one airline. Ultimately it’s still only a voucher and not cash, but it’s at least nice that an airline has some level of accountability for controllable delays.
Southwest Airlines is facing a $140 million fine from the DOT for its 2022 holiday meltdown. In reality, most of that money is going back to consumers, with $90 million of that being in the form of vouchers that the airline has to issue in the future for controllable delays.
What do you make of the DOT’s fine against Southwest?