Southwest Airlines will be forced to pay passengers a $75 travel credit if they arrive at their destination late by three or more hours as part of a record penalty by the Department of Transportation (DOT) against the carrier.
DOT officials have slapped Southwest with the massive penalty following a lengthy investigation into the airline’s much-publicized 2022 Holiday travel operational meltdown, which resulted in the cancellation of nearly 17,000 flights, stranding around two million passengers.
The penalty includes a record $140 million fine against Southwest for a string of violations of consumer protection laws during the meltdown. The penalty is 30 times larger than any other fine issued by the DOT for consumer protection breaches, the agency announced on Monday.
Much of the penalty will go towards paying passengers impacted by delayed or canceled flights that occur in the future rather than compensating passengers any further for the issues they faced when trying to travel with Southwest last December.
Southwest will, however, only have to pay $35 million of the $140 million fine because $33 million is being offset against a Rapid Rewards points giveaway that Southwest ran for passengers affected by the meltdown, and a further $72 million is being offset against a compensation scheme that the DOT has ordered Southwest to set up.
Valued at a total of $90 million, Southwest will use the money set aside in the compensation fund to pay a $75 travel credit to any passenger delayed by three or more hours due to a reason within the airline’s control.
U.S. Transportation Secretary Pete Buttigieg claims the total penalty levied against Southwest is valued at $750 million because the DOT ensured the airline reimbursed stranded passengers for meals, accommodation, and other disruption-related expenses at a cost of $600 million.
“Today’s action sets a new precedent and sends a clear message,” commented Buttigieg. “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.”
The DOT had also been investigating Southwest for unrealistic scheduling, given that the airline should have known it couldn’t operate as many flights as it was selling tickets for. That investigation has, however, been dropped after the latest settlement between the DOT and Southwest.
