Southwest Airlines is facing a record 0 million penalty over last year's holiday hellscape. The meltdown affected 2 million passengers.

Business Correspondent

Southwest Airlines’ $140 million fine includes future travel vouchers

Dec 18, 2023

By Simone Del Rosario (Business Correspondent), Emma Stoltzfus (Editor)

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Southwest Airlines is facing a $140 million penalty over 2022’s holiday hellscape. The airline’s nationwide meltdown disrupted travel for about two million passengers at the end of December. In all, Southwest Airlines canceled nearly 17,000 flights.

On Monday, Dec. 18, the Department of Transportation announced the record-setting fine, which is roughly 30 times what was previously the department’s largest airline penalty.

“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.

Part of the $140 million penalty mandates Southwest Airlines set up a $90 million compensation fund. That fund will be used to distribute $75 travel vouchers to future passengers who get to their destination at least three hours late when it is the airline’s fault. The payout is on top of the airline already paying for hotels, food and handling rebooking.

The government said over 2022’s holiday travel, Southwest violated consumer protection laws in three ways:

Failing to provide adequate customer service assistance
Failing to provide prompt flight status notifications
Failing to provide refunds in a prompt and proper manner

Of the $140 million penalty, $35 million is a cash penalty Southwest will pay the government. The rest will go to passengers through the mandated $90 million compensation fund and Rapid Rewards points.

“Southwest is going to be leading the industry, if only because they’ve been ordered to,” Buttigieg said.

Buttigieg said the government is working on a rule that could make direct compensation an industry standard.

The Department of Transportation said Southwest Airlines has already paid more than $600 million in refunds and reimbursements to travelers affected by the notorious holiday meltdown of 2022. Together, the department said this penalty brings Southwest’s total compensation to more than $750 million. Southwest also distributed 25,000 reward points to each passenger affected in 2022.

Tags: Airlines, Department of Transportation, Pete Buttigieg, Southwest airlines

Simone Del Rosario: The next time your flight’s delayed, the airline could be forced to pay you for your trouble.

Passenger: Christmas was just ruined, this was the worst Christmas ever.

Simone Del Rosario: Remember Southwest Airlines’ holiday hellscape last year? The airline’s nationwide meltdown disrupted travel for about two million passengers.

Passenger: Everything’s been canceled. And we’re not very happy.

White House Press Secretary Karine Jean-Pierre: Southwest Airlines failed its customers, point blank.

Simone Del Rosario: On Monday, the Department of Transportation announced it is fining Southwest $140 million. Transportation Secretary Pete Buttigieg says the record-setting penalty is not just about holding Southwest accountable for ruining the holidays.

Transportation Secretary Pete Buttigieg: But also about setting a new precedent. This is a multiple, depending how you do the math, about 30 times the biggest penalty we’ve ever assessed, because we really need to send a message to the entire airline industry.

Simone Del Rosario: Part of that penalty mandates Southwest automatically pay $75 travel vouchers for future passengers that get to their destination at least three hours late when it’s the airline’s fault. That’s on top of already paying for hotels, food and rebooking. Southwest is forced to set aside a $90 million fund for this.

Passenger: Can we press charges through you?

Simone Del Rosario: The government says over last year’s holiday travel, Southwest violated consumer protection laws in three ways: By failing to provide adequate customer service assistance, flight status notifications, and refunds in a timely manner.

Now, of the $140 million penalty, $35 million is a cash penalty Southwest will pay the government. The rest will go to passengers, through that mandated compensation fund and Rapid Rewards points.

Transportation Secretary Pete Buttigieg: Southwest is going to be leading the industry, if only because they’ve been ordered to.

Simone Del Rosario: Buttigieg says the government’s working on a rule that could make this direct compensation an industry standard.