Southwest Airlines Fined $140 Million for 2022 Holiday Failures

 Southwest Airlines has agreed to pay a $140 million civil penalty for operational failures during the 2022 Christmas and New Year holidays that led to cancellation of 16,900 flights and left more than two million travelers stranded.

The fine, which is 30 times larger than any of the Department of Transportation's (DOT) previous penalties, is in addition to the more than $600 million in refunds and reimbursements that Southwest was already ordered to pay travelers affected by the holiday meltdown, the DOT said today (December 18).

In total the airline will pay more than $750 million for the operational failures, most of which will go toward passenger refunds, reimbursements, rapid rewards or future compensation, the DOT said.

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After the disastrous 2022 holiday season, Southwest said that it was ready for winter. "We are very confident in the winter operational preparedness we’ve completed, and we’ve already seen positive signs during summer weather disruptions," spokesperson Tiffany Valdez recently told Kiplinger.

Under its agreement with DOT, Southwest must:

• Reserve $90 million in transferrable vouchers of $75 or more for future Southwest customers affected by controllable cancellations and delays of three hours or more. This will ensure that passengers impacted by any future significant disruptions will receive flight rebooking, hotels and food during the delay as well as timely compensation from the airline due to inconvenience, the DOT said.
• Pay the $140 million civil penalty for violating consumer protection laws, action that is meant to deter the airline as well as other carriers from "committing similar violations in the future," the DOT said. Of this amount, $35 million will go to the Treasury Department, and $72 million will go toward offsetting the $90 million penalty above. The DOT will also credit Southwest $33 million against the penalty for issuing 25,000 Rapid Rewards points to the travelers who were affected by the holiday failures.
• Ensure that passengers have been refunded and reimbursed for more than $600 million for significant delays and cancellations during the 2022 holiday season. The airline also provided 25,000 miles to each passenger who was impacted, the DOT said.

Setting precedent

“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. “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.”

Earlier this year, the DOT and the Biden administration proposed new rules to help when flights get cancelled or delayed. The proposed rules are aimed at addressing passenger concerns including compensation for when there are controllable cancellations or delays of three hours or more as well as meal vouchers or overnight accommodations, ground transportation and rebooking.

For air travel complaints, the DOT directs air travelers to its customer service dashboard.

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