In the latest development, The U.S. Transportation Department has ordered Southwest to pay a $140 million civil penalty, part of a broader consent order, after the airline’s operational failures a year ago. That penalty is by far the largest the DOT has ever levied for consumer protection violations, according to a statement from the department.
The DOT cited numerous violations of consumer protection laws during and after the operational failures that cancelled 16,900 flights and stranded over two million passengers over the 2022 Christmas holiday and into the New Year. This penalty is 30 times larger than any previous DOT penalty for consumer protection violations. The majority of the penalty will go towards compensating future Southwest passengers affected by cancellations or significant delays caused by the airline.
“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,” said U.S. Transportation Secretary Pete 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 penalty is in addition to the more than $600 million in refunds and reimbursements that DOT already ensured Southwest provide passengers who faced travel disruptions during the operational meltdown. In September 2022, at the urging of Secretary Buttigieg, Southwest Airlines made significant changes to its customer service plan that entitled passengers to reimbursements for expenses such as meals, hotels, and ground transportation if a flight is significantly delayed or cancelled due to an airline issue. As a result of DOT’s actions, Southwest was legally required to adhere to those commitments during the 2022 holiday travel meltdown.
DOT’s investigation into Southwest’s operations during the 2022 holiday season included examining tens of thousands of pages documents, conducting several multi-day, in-person audits and site visits at Southwest’s headquarters, reviewing thousands of consumer complaints, and consulting with various third parties, such as airports.
Southwest’s Operational and Scheduling Failures
Specifically, in its investigation, DOT found the company violated consumer protection laws by:
- Failing to provide adequate customer service assistance: When Southwest customers contacted the company’s customer service, they were often met with busy signals, hours-long queues to connect with agents, or dropped calls. DOT’s investigation found that Southwest’s call center was overwhelmed, which at times led to a full call center queue and meant customers got a busy signal upon calling the customer service telephone number.
- Failing to provide prompt flight status notifications: Southwest’s policy states that it will update consumers about flight status changes via text or email, but during the holiday disruptions, many Southwest customers did not receive a flight status notification in any form, while others received inaccurate ones. DOT’s investigation found that Southwest’s process for notifying passengers broke down, and as a result, the airline failed to provide prompt notification of flight cancellations and delays.
- Failing to provide refunds in a prompt and proper manner: DOT’s investigation included an audit of Southwest’s refunds and reimbursements system to ensure that harmed passengers received what they were owed. DOT found that thousands of customers were not promptly refunded.
As part of the enforcement action and settlement, DOT is closing its unrealistic scheduling investigation without making a finding. Under federal law, unrealistic scheduling is considered an unfair and deceptive practice. In a statement, the DOT says, “today’s penalty will deter airlines from engaging in any unfair and deceptive practices against consumers. DOT is continuing to monitor airlines to identify instances of potential unrealistic scheduling. The Department will act if it finds that an airline has violated consumer protection requirements including setting an unrealistic schedule.”
Southwest’s Consent Order
In addition to the $140 million civil penalty, the settlement includes a consent order that will require Southwest to:
- Establish a $90 million compensation system for future passengers affected by controllable significant delays and cancellations. Specifically, in the event Southwest causes a passenger to arrive at their destination three hours or more after their original scheduled arrival time due to an issue within Southwest’s control, Southwest is required to provide the passenger with a transferrable $75 voucher for future use on the airline.
- Ensure passengers were refunded and reimbursed over $600 million for significant delays and cancellations during the 2022 holiday season. Southwest also provided 25,000 miles to each passenger impacted by the meltdown.
In a statement, Southwest described the agreement as “a consumer-friendly settlement.” The airline says it has taken steps since last year’s disruption to improve its operational resiliency and customer care.
“We have spent the past year acutely focused on efforts to enhance the Customer Experience with significant investments and initiatives that accelerate operational resiliency,” said Bob Jordan, Southwest Airlines President & CEO 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.” 
PHOTO: BOEING 737-7H4 N766SW, BY Z. BUBAKAZ, USED UNDER CC BY-SA 2.0
Joseph McCafferty is editor & publisher of Compliance Chief 360°