U.S. fines Southwest Airlines $140 million after 2022 meltdown
The U.S. Department of Transportation fined Southwest Airlines Co. $140 million for violating consumer protection laws, nearly a year after a late December meltdown of its operations during a storm stranded more than 2 million passengers.
The DOT said the penalty is 30 times larger than any other consumer protection violation fine it’s issued.
Most of the money will be used as compensation toward Southwest passengers with canceled flights or significant delays in the future, according to the DOT.
“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,” Transportation Secretary Pete Buttigieg said in a statement.
Through a DOT investigation, the agency said it found the company failed to provide appropriate customer service, issue prompt flight status notifications and provide refunds in a proper manner.
The agency also said it’s closing its investigation into how Southwest schedules flights without a conclusion in order to “obtain quick relief for the public.”
Southwest Airlines said in a statement that it’s “grateful” to have reached a “consumer-friendly settlement.”
The airline touted changes to its compensation policy which will provide a $75 or more voucher for passengers who experience controllable cancellations and lengthy delays starting in April 2024.
The stock is down about 15% this year.
Mass cancellations
Last December, Southwest scrapped more than 16,700 flights over 10 days, after a winter storm snarled flights, leaving crew members and planes scattered across 50 airports.
The disruptions overwhelmed the airline’s outmoded crew scheduling system, forcing it to cancel most flights to re-set its network.
In January, the U.S. Department of Transportation launched a “rigorous and comprehensive investigation” of Southwest’s operational meltdown during the holidays last year.
The agency was examining whether Southwest executives allowed “unrealistic scheduling of flights,” which is considered an unfair and deceptive practice under federal law.
With holiday travel just around the corner, Southwest Chief Executive Officer Bob Jordan on Dec. 13 vowed to avoid a repeat of the meltdown, saying the airline is “absolutely ready” for strong winter storms this year.
A day later, Jordan said that he would “guarantee” that such a meltdown would “never happen again.”
The airline has added de-icing trucks and pads, trained new workers and updated airport infrastructure.
Other changes included updating technology used for crew scheduling and communications, realigning network planning with its operations control center and improving early warning systems for potential disruptions.
The company was previously instructed by the DOT to provide over $600 million in refunds and reimbursements for delays and cancellations during the 2022 holiday season.