The US Department of Transportation on 18 December issued a $140 million penalty in response to Southwest Airlines’ system-wide operational meltdown that cancelled 16,900 flights and left 2 million passengers stranded during the height of seasonal demand for air travel in December 2022.
The penalty is to be paid as a combination of fines and passenger compensation, US Transportation Secretary Pete Buttigieg said in an 18 December Instagram post.
”This is a message to the entire airline industry – they must take care of passengers, or we’ll use the full extent of our authority to hold them accountable,” he says.
The penalty is 30 times greater than the DOT’s previous record for consumer protection violations, the department says, though the majority of the money will go toward compensating Southwest passengers for future travel disruptions.
Southwest’s operations fell apart near the end of 2022 as a severe winter storm hit the USA. Other airlines recovered quickly while Southwest’s crew-scheduling system broke down, forcing it to drastically reduce capacity during peak holiday travel. Millions of passengers were delayed or prevented from being with their families.
Under intense pressure from customers and US regulators, the carrier issued $600 million in refunds and travel reimbursements to passengers who were impacted by its catastrophic performance.
In response to the DOT’s penalty, Southwest points to its operational stability throughout 2023 and its 97% on-time performance on Thanksgiving Day.
”We’re pleased to have reached this consumer-friendly settlement, which includes a new, industry-leading policy to compensate customers during significant delays and cancellations,” says the Dallas-based carrier. ”We learned from the event, with subsequent investment realising a vast improvement toward our resiliency and customer experience, and one that allows us to put our entire focus on the future.”
Under the terms of the penalty, Southwest has been credited $33 million for offering rewards miles to passengers who were affected by last winter’s meltdown. Southwest will pay $35 million in cash to the DOT over a three-year period, with the remaining $72 million set aside for compensating passengers for future disruptions.
“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,” Buttigieg says.
The penalty comes as airlines are gearing up for another busy holiday travel season, with major US carriers anticipating record passenger figures.