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.
