Southwest Airlines will pay a $35 million fine as part of a $140 million settlement it reached with the U.S. Department of Transportation (DOT) after the cancelations of nearly 17,000 flights left over two million travelers stranded over the chaotic holiday season last year.
Most of the penalty, which is 30 times larger than any in DOT history, will go towards compensating future Southwest passengers affected by cancelations or significant delays, the DOT said.
"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," U.S. Transportation Secretary Pete Buttigieg said. "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 said it was "grateful to have reached a consumer-friendly settlement" giving the airline credit for compensation it already provided to customers. The airline said it has "learned from the event, and now can shift its entire focus to the future."
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Southwest canceled about 16,700 flights over the last 10 days of December 2022. The meltdown began with a winter storm, but Southwest continued to struggle long after most other airlines had recovered, in part because its crew-scheduling system became overloaded.
During its investigation, DOT said it found that Southwest had violated consumer protection laws by failing to provide adequate customer service assistance, leaving travelers stranded at airports and hotels to scramble for other flights and accommodations.
Many customers who called Southwest’s call center for help were left with a busy signal or were stuck on hold for hours.
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Southwest also failed to provide customers with prompt flight status notifications. Many travelers did not receive any kind of flight update and only learned of the cancelations after arriving at the airport.
DOT also said Southwest did not provide refunds quickly enough to thousands of customers. Those who submitted requests to a Southwest website were faced with errors that prevented them from receiving their refunds, and others were not given immediate refunds for services like pet fees or upgraded boarding that were never used because of the cancelations.
In addition to the $35 million fine, the settlement will see Southwest get $33 million in credit for compensation already handed out, mostly for giving 25,000 frequent flyer points each to affected customers.
The company also promised to give out $90 million in vouchers to future travelers, with the airline receiving credit for $72 million for the future vouchers.
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In exchange for Southwest agreeing to the fine and other measures, the government stopped short of deciding whether the airline advertised a flight schedule that it knew could not be kept.
