Southwest Fined $140M Over Last Winter's Meltdown

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Facts

  • The US Transportation Department (DOT) on Monday handed Southwest Airlines a $140M fine for its failure to provide prompt customer service, flight notifications, and refunds during its operational meltdown last Christmas and New Year.1
  • Of the $140M, $35M will be paid to the federal government, while Southwest will get a $33M credit for providing 25K frequent-flier points to affected passengers.2
  • The DOT has also agreed to lower its fee by $72M, as the airline has promised to issue $90M in vouchers to travelers affected by any future delays and cancellations.3
  • During last year's holiday season, after a spurt of severe winter weather, Southwest canceled or delayed nearly 17K flights, affecting 2M passengers. The airline has claimed the meltdown cost it $800M in lost revenue.4
  • Transportation Secretary Pete Buttigieg said the $140M fine 'should put all airlines on notice' to ensure a similar operational disruption never happens again.5
  • In response, Southwest said it's 'pleased to have reached this consumer-friendly settlement,' adding it had 'learned from the event' and plans to make new investments to enhance customer service.6

Sources: 1New York Times, 2Verge, 3CBS, 4Washington Post, 5Associated Press and 6Abc news.

Narratives

  • Narrative A, as provided by Daily Mail. If the Biden administration is attempting to make an example of Southwest, it's working. Considering the efforts Southwest went to in compensating affected passengers, this was an extremely harsh penalty. In any case, Southwest wanted to make things right, so it agreed to the fine even though it's already significantly improved its technology and customer service to avoid further instances of turmoil ahead of this year's holiday season.
  • Narrative B, as provided by New York Post. The severity of the penalties imposed on Southwest is more than justified. 2022's holiday meltdown had catastrophic consequences for over two million passengers, and Southwest has since spent most of its energy dodging litigation. It remains to be seen whether improvements made to Southwest's systems will be successful, but it should soon become clear, as record numbers are expected to take to the skies in advance of the upcoming holiday period.