Southwest Airlines hit with $140 million civil penalty over holiday meltdown
WASHINGTON — Southwest Airlines is still feeling the repercussions of its massive collapse during the 2022 holidays that left millions of travelers stranded, and the bill is only getting larger. The U.S. Transportation Department has ordered the airline to pay a $140 million civil penalty as part of a broader consent order following the airline’s operational failures a year ago.
This penalty is the largest the DOT has ever imposed for consumer protection violations, according to a statement from the department.
Transportation Secretary Pete Buttigieg said in an interview with NPR’s Morning Edition on Monday, “This is not just about Southwest. This is about the entire industry, sending a signal that you should not be cutting corners — because if you fail your passengers, we will hold you accountable.”
The airline canceled 16,900 flights and left more than 2 million passengers stranded following a major winter storm in December 2022. While other airlines were able to recover relatively quickly, Southwest encountered significant difficulties.
In response to the penalty, Southwest Airlines President & CEO Bob Jordan said, “We have spent the past year acutely focused on efforts to enhance the Customer Experience with significant investments and initiatives that accelerate operational resiliency.”
Under the agreement, Southwest is required to establish a $90 million compensation system for future passengers affected by significant delays and cancellations. The airline will also pay $35 million in cash to the U.S. Treasury, spread out over three years.
Southwest reported $193 million in profits during the third quarter of 2023. The airline has already paid out $600 million in refunds and reimbursements to travelers who faced disruptions due to the holiday meltdown. This brings the total amount paid by the airline to over $750 million, according to the DOT.
“The Civil penalty comes in addition to $600 million in refunds and reimbursements that Southwest has paid to travelers who faced disruptions. In total, the airline will shell out more than $750 million for the holiday meltdown, DOT said.””
While Buttigieg acknowledged that the U.S. airline industry has improved its operational performance since last year, consumer advocates say that delays and mishandled luggage are still issues. Complaints about U.S. airlines have also climbed sharply, with travelers filing more than 26,000 formal complaints about U.S. airlines in the first five months of 2023 — more than double the number filed during the same period last year, according to a report published last week.
The penalty imposed on Southwest is a strong reminder to all airlines that they are accountable for meeting their obligations to passengers. The hope is that the penalty sends a strong message that airlines cannot disregard the needs of their passengers.