In a groundbreaking development, Southwest Airlines has agreed to an unprecedented $140 million civil penalty over the tumultuous holiday season of 2022, during which 16,900 flights were canceled, leaving a staggering 2 million passengers stranded, as announced by the U.S. government on Monday.
The extensive investigation conducted by the U.S. Department of Transportation (USDOT) culminated in a consent order that not only settles the probing inquiry into the massive travel disruption but also aims to serve as a formidable deterrent, according to statements from the agency.
The settlement comprises a $35 million cash fine and an innovative three-year directive requiring Southwest to furnish $90 million in travel vouchers, each valued at $75 or more, to passengers who experienced delays of at least three hours due to airline-caused issues or cancellations.
Part of the Biden administration’s assertive stance on airline accountability, the “industry leading” U.S. delay compensation program is slated to commence in April. Southwest assures that vouchers will be readily available “upon request.”
Transportation Secretary Pete Buttigieg sternly asserted, “If airlines fail their passengers, we will use the full extent of our authority to hold them accountable.”
The colossal disruption during the 2022 winter storm generated harrowing travel anecdotes, including missed funerals, disrupted holiday gatherings, and desperate cross-country drives lasting 17 hours or more. Some unfortunate cancer patients even faced challenges accessing vital treatment. A senior executive candidly admitted, “We messed up.”
Despite Southwest having already disbursed over $600 million to affected passengers and incurring a total cost exceeding $1 billion due to the storm, the airline has diligently undertaken significant technological upgrades and consumer service enhancements in the past year. This includes expanded de-icing equipment, bolstered staffing, and the integration of artificial intelligence to forecast network health.
Southwest CEO Bob Jordan emphasized the airline’s readiness for winter, noting substantial operational improvements throughout the year. In a recent Reuters interview, he expressed satisfaction in resolving the investigation, asserting, “It was a historic storm that led to a historic week of operational disruption.” Jordan reassured that an upheaval of such magnitude “is not going to happen again.”
The penalty imposed on Southwest dwarfs previous records, surpassing the $4.5 million fine levied on Air Canada. Notably, Southwest’s penalty, inclusive of the $35 million fine payable over three years, surpasses the cumulative penalties imposed by USDOT since 1996.
USDOT’s findings underscore Southwest’s violation of consumer protection laws, citing inadequate customer service assistance and delayed notifications to hundreds of thousands of customers. Jordan defended the $30 million in annual vouchers as an appropriate measure aligned with operational performance.
While USDOT closed its “unrealistic scheduling investigation” without conclusive findings, it credited Southwest with $33 million toward the penalty for voluntarily awarding frequent flyer points to impacted passengers, aiming to encourage other airlines to adopt similar measures during operational challenges.
President Joe Biden had previously signaled the intention of proposing new rules for airlines to compensate passengers with cash for significant flight delays or cancellations caused by carriers. Despite resistance from most carriers, including Southwest, which committed to providing hotels, meals, and ground transportation, the administration remains steadfast in its pursuit of enhanced passenger compensation.
This monumental penalty underscores a paradigm shift in the aviation industry, emphasizing a renewed commitment to passenger rights and accountability.
