Southwest to Pay $140 Million After Massive Holiday Flight Disruptions

Southwest Airlines will pay an unprecedented $140 million in penalties over failings that stranded two million passengers last holiday season, the U.S. Department of Transportation (DOT) has announced.

The DOT found that the Dallas-based airline violated consumer protection laws after a December 2022 blizzard. Overly optimistic weather forecasts and an out-of-date scheduling system led the airline to axe 16,700 flights and delay thousands more following a pre-Christmas storm.

Photo: Courtesy of Southwest Airlines

Southwest failed to provide customers with accurate and prompt text and email notifications of this disruption, contrary to its stated policy. The DOT found that many travelers didn’t discover their flights had been canceled until they arrived at the airport.

Stranded passengers also struggled to contact Southwest to arrange alternative transportation and accommodation. With the carrier’s call center overwhelmed, customers encountered hours-long waits to speak to Southwest employees, busy signals, and dropped calls.

In the aftermath, the DOT found that Southwest failed to promptly reimburse some customers, including those who paid for optional services, such as fees for pets or upgraded boarding, on flights that were axed. Additionally, the airline failed to notify some customers that the refund requests they submitted through its website contained errors.

These failings were exposed during a months-long investigation by the DOT, during which officials examined tens of thousands of pages of internal documents, audited the airline’s refunds and reimbursement system, reviewed thousands of consumer complaints, visited Southwest headquarters, and consulted with third parties, including airports.

The settlement includes a $35 million cash fine for the U.S. Treasury over three years. Southwest has also agreed to set aside $90 million to compensate passengers affected by disruptions in the future.

Photo: Courtesy of Southwest Airlines

When travelers are delayed more than three hours due to an issue under Southwest’s control, including mechanical faults, they’ll receive $75 in flight credit and any required rebookings, hotels, and food during their delay. Southwest said this compensation program is “industry-leading.”

The total $140 million penalty is 30 times larger than any previous fine against an airline and greater than all penalties handed down by the DOT combined since 1996. The magnitude of the fine will serve as a deterrent for other airlines, said the DOT, which pledged last January to seek higher penalties from carriers violating consumer protection law.

“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,” Transportation Secretary Pete Buttigieg said.

Separately, Southwest has already paid over $600 million to compensate passengers affected by the meltdown and pledged millions more to upgrade systems that failed last winter, including its scheduling software and the electronics communications between crews and scheduling teams.

Southwest said it has “learned from the event” and is “pleased to have reached this consumer friendly settlement” with the DOT.

In an interview with Reuters, Southwest CEO Bob Jordan highlighted the role of bad weather in the chaos last winter. “It was a historic storm that led to a historic week of operational disruption,” he said. He added that a similar meltdown “will not happen again,” and that Southwest is “absolutely prepared for winter” this year.