Southwest to pay $140M for December 2022 travel failures

The havoc created by thousands of canceled Southwest Airlines flights last December will cost the company hundreds of millions of dollars.

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Southwest has settled to pay $140 million to end the federal investigation into what happened during the 2022 busy holiday travel season.

The government said it was 30 times what it had ever penalized other companies for breaking airline consumer protections, The Washington Post reported.

The Transportation Department had fined American Airlines $4.1 million for stranding people on airport tarmacs for hours, the newspaper reported.

Part of the $140 million agreement includes a $35 million fine and the total is the largest amount of money the government has forced an airline to pay for going against consumer protection laws, The Associated Press reported.

Transportation Secretary Pete Buttigieg said that the settlement shows the agency will ensure that airlines take care of passengers and that the issues that plagued Southwest and left 2 million people stranded don’t happen again.

Freezing weather hit just before Christmas last year causing Southwest to delay or cancel 16,900 flights. The weather caused the initial issues but when other carriers that had also been grounded came back online, the staff scheduling system that Southwest used couldn’t handle the disruption, which unions had warned the company about, causing the travel headaches to snowball, the Post reported.

The government said that Southwest “violated the law on numerous occasions” including not helping stranded customers, and making the passengers look for other flights.

The company’s customer service center was jammed with customers saying they had either busy signals or were on hold for hours.

Southwest was also accused of not updating flyers when their planes were either canceled or delayed. Some passengers said they were never notified and could not access the company’s website. Airlines are required to notify passengers within 30 minutes of an itinerary change.

The government said that Southwest didn’t issue refunds quickly enough and that some who used a special company website to get their money back either had errors or never received the repayment, the AP reported. Some refunds that were not immediately returned included pet fees and boarding upgrades that were not used after flights were canceled.

Southwest denied the accusation, adding that only a small portion of refunds were late, but said it settled to bring an end to the case, the AP reported. The airline had already agreed to pay $600 million in refunds or reimbursements, but the government said that it was not enough and threatened civil penalties.

Southwest called the settlement “consumer-friendly” adding that it was given credit for compensation it had already paid customers.

The company is getting $33 million credit for what was already given to customers, mostly in the form of 25,000 frequent flyer points each. The value of the points is about $300 per person. The company vowed to issue $90 million in vouchers, but those are only worth 80% of face value. If Southwest doesn’t pay the entire pledged amount of vouchers, they will be penalized 80% of the shortfall.

The airline said that it has “learned from the event, and now can shift its entire focus to the future.”

The company performed well during the Thanksgiving travel season, the Post reported.

To prevent a weather-related, multi-day meltdown, the company has already added de-icing equipment to its fleet and will have more staff on duty during extreme cold weather at some airports.

Southwest said the issues cost the company about $1.1 billion, the AP reported.

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Passengers stranded, bags pile up as Southwest cancels flights CHICAGO, IL - DECEMBER 27: Stranded travelers search for their luggage at the Southwest Airlines Baggage Claim at Midway Airport on December 27, 2022 in Chicago, Illinois. A snowstorm and severe cold front that hit Chicago before the holiday weekend stranded many travelers and their luggage. Southwest Airlines has canceled approximately 5,400 flights in less than 48 hours due to a variety of issues including this year’s historic winter storm and scheduling complications involving crew members. On Monday, Southwest had 10 times more flights canceled than Delta Airlines, which had the second most cancellations nationwide this holiday season. (Photo by Jim Vondruska/Getty Images) (Jim Vondruska/Getty Images)