The sum exceeds the total of all penalties imposed by the US Department of Transportation since 1996
Southwest Airlines has reached an unprecedented $140 million civil penalty agreement for the December 2022 holiday chaos, resulting in 16,900 flight cancellations and leaving 2 million passengers stranded.
The US Department of Transportation (USDOT) consent order concludes an extensive government inquiry into the substantial travel upheaval and serves as “a strong deterrent,” according to the agency.
The settlement encompasses a $35 million cash fine and a three-year requirement for Southwest to offer $90 million in travel vouchers of $75 or more to passengers facing delays of at least three hours due to an airline-caused issue or cancellation, ensuring compensation.
The forthcoming US delay compensation program, described as “industry-leading,” is slated to commence by April. This initiative is a component of the Biden administration’s robust endeavors to take a stern stance against airlines, seeking to enforce new regulations regarding passenger compensation. Southwest Airlines stated that vouchers will be granted “upon request.
“If airlines fall short in serving their passengers, we will employ the complete scope of our authority to ensure they are held responsible,” stated Transportation Secretary Pete Buttigieg.
The significant winter storm and the ensuing turmoil in 2022 gave rise to tales of travel nightmares: individuals missing important events like funerals or highly anticipated holiday gatherings, passengers with canceled flights compelled to endure cross-country drives lasting 17 hours or more, and even some cancer patients unable to access necessary treatment. In addressing irate lawmakers, one senior executive frankly admitted, “We messed up.
Southwest, having disbursed over $600 million to passengers impacted by the storm that incurred a cost exceeding $1 billion, has undertaken substantial technological enhancements, improvements in customer service, and various investments. These include additional de-icing equipment throughout its network, new staffing, software implementations, and the utilization of artificial intelligence for predicting network health.
The airline has witnessed notable operational advancements this year. Southwest’s CEO, Bob Jordan, affirmed in a Monday Reuters interview, “We are fully equipped for winter,” highlighting the airline’s robust performance throughout the year.
He expressed the airline’s satisfaction in resolving the investigation, clarifying that it does not acknowledge any wrongdoing. According to Jordan, the unprecedented storm resulted in a historic week of operational upheaval. He emphasized that a disruption of such magnitude “is not going to happen again.
The most substantial penalty prior to this was $4.5 million, imposed on Air Canada, although initially, USDOT had sought $25.5 million. Southwest’s penalty, encompassing the $35 million fine distributed over three years, surpasses the cumulative total of all penalties imposed by USDOT since 1996. In January, USDOT announced its intention to pursue higher fines.
USDOT determined that Southwest violated consumer protection laws by inadequately providing customer service assistance through its call center to hundreds of thousands of customers. Additionally, the airline failed to promptly notify flight statuses to over 1 million passengers and issue timely refunds to thousands.
Jordan, noting that over 99% of refunds were handled within seven days, mentioned that the annual $30 million in vouchers aligns “roughly equivalent to our operational performance… It’s the right number.”
He emphasized that Southwest would streamline the process to request compensation, making it “really easy.” When queried about the program’s future after three years, Jordan stated that consumer programs “rarely change or go away.”
USDOT also announced the closure of its “unrealistic scheduling investigation” without reaching any specific conclusions. The agency acknowledged Southwest’s contribution of $33 million toward the penalty, as the airline voluntarily distributed frequent flyer points to hundreds of thousands of affected passengers “to encourage other airlines to adopt similar measures” during operational challenges.
In May, President Joe Biden stated that USDOT would introduce new regulations mandating airlines to provide monetary compensation to passengers for substantial flight delays or cancellations attributable to the carriers.
In the previous year, USDOT inquired with carriers whether they would be willing to offer a minimum of $100 for delays lasting at least three hours attributable to the airlines, but none consented.
In August 2022, the majority of carriers, Southwest included, pledged voluntarily to furnish hotels, meals, and ground transportation for delays or cancellations caused by the airline. However, they resisted the idea of providing cash compensation.
