Investing 18-12-2023 13:04 13 Views

Southwest fined $140 million over 2022 holiday flight disruptions

The Department of Transportation fined Southwest Airlines $140 million for major flight disruptions during the 2022 holiday season and resulted in nearly 17,000 significantly delayed or canceled flights, the DOT announced Monday.

The civil penalty — which the DOT said is 30 times larger than any prior department penalty for consumer protection violations — will mostly go toward paying future Southwest passengers affected by major delays or cancellations caused by the airline, the Transportation Department said in a release. It is in addition to $600 million in refunds and reimbursements Southwest already gave passengers.

In its nearly yearlong investigation, the DOT found Southwest violated a number of consumer protection laws by failing to provide proper customer service (namely through the call center), prompt flight status notifications and refunds in a prompt or proper manner, the DOT said in its release.

“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 written 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.” 

Southwest said in a statement that it “is committed to delivering the highest standard of excellence in Customer Service” and that it is “pleased” to have reached this settlement “which includes a new, industry-leading policy to compensate Customers during significant delays and cancellations.”

The holiday meltdown stranded over 2 million passengers during Christmas last year and into the New Year, and resulted in more than 16,900 canceled or delayed flights.

Last December, Southwest said the airline was fully staffed for the holiday travel season, but bad weather caused daily flight schedule changes “at a volume and magnitude that still has the tools our teams use to recover the airline operating at capacity.” It called its own performance “unacceptable.”

A Southwest spokesman said at the time that cancellations piled up amid winter storms across the country, leaving flight crews and planes out of place.

In the aftermath, some passengers vowed to never fly Southwest again and the airline reported $220 million in losses that quarter. In February, a top Southwest executive apologized for the disaster at a Senate hearing.

In total, the airline will pay more than $750 million, with most funds going toward passenger refunds, reimbursements, Rapid Rewards or future compensation, the DOT said.

The DOT said it also instructed the airline to put aside a $90 million in vouchers for future travelers who are affected by delays and cancellations.

Southwest said Monday that it has worked to improve the customer experience with digital bag tracking, flight credits that don’t expire, the ability to request a refund if a traveler chooses not to continue a trip when Southwest has canceled a flight, more rebooking options and better weather notifications.

Southwest customers are also entitled to some reimbursements for meals, hotels and ground transportation when faced with major controllable delays or cancellations, the DOT said, because of changes the airline made in September 2022.

“We have spent the past year acutely focused on efforts to enhance the Customer Experience with significant investments and initiatives that accelerate operational resiliency, enhance cross-team collaboration and bolster overall preparedness for winter operations,” Bob Jordan, Southwest president and CEO, said in a statement. “Our commitment to Customers has been central to our success across our 52-year history and has helped us become one of the world’s most admired and trusted airlines.” 

The DOT said in January that it was also investigating whether Southwest engaged in unrealistic scheduling of flights. As part of the $140 million settlement, the department said Monday it was closing that investigation ‘without making a finding as its goal is to obtain quick relief for the public.”

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