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DOT Imposes Record Fine Against Southwest Airlines for Christmas Meltdown

Posted  December 28, 2023

Last week (December 18), the Department of Transportation (DOT) announced a landmark $140 million penalty against Southwest Airlines for operational failures that stranded more than two million passengers over last year’s Christmas holiday season.  DOT trumpeted it as 30 times larger than any previous DOT penalty for consumer protection violations.  And it is on top of another $600 million in refunds and rewards the airline must provide the affected passengers.  Finally some payback for an airline behaving badly.

After an extensive investigation into what DOT characterized as Southwest’s “holiday meltdown,” here is what DOT found:

  • Failure in Customer Service: Southwest cancelled 16,900 flights, leaving hundreds of thousands of customers with nowhere to go.  When they tried to get help from Southwest Customer Service, they were met with busy signals, hours-long waits, or dropped calls.
  • Failure to Provide Updates: Southwest failed to timely update passengers of flight cancellations and delays. Some did not receive updates of any kind, while others received inaccurate ones or learned of cancellations only after arriving at the airport.
  • Failure to Provide Timely Refunds: For thousands of passengers, Southwest did not provide proper refunds until after DOT identified the failure. For thousands more, the airline did not provide refunds for optional service fees, like pet fees or upgraded boarding, that they purchased but were never able to use.

Here is a copy of the DOT Consent Order detailing the specifics of the agency’s findings.  In an effort to compensate these passengers for their troubles, DOT required Southwest to provide refunds or reimbursements worth roughly $600 million to cover meals, accommodations, and other disruption-related expenses incurred by stranded passengers.  The payments also covered refunds for cancelled flights regardless of the reason for the cancellation.  The airline also gifted 25,000 miles to each passenger impacted by the customer service breakdown.

In heavily promoting the settlement, DOT is hoping to send a message to other airlines to clean up their customer service acts.  DOT Secretary Pete Buttigieg could not have been clearer in his signaling:

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.  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.

DOT also used the settlement to highlight the other steps it has taken to hold all airlines accountable to their passengers.  The agency boasted that under the Biden-Harris Administration, the agency “has returned a record amount of over $3 billion in refunds and reimbursements to travelers, issued the largest ever penalties against airlines for failing passengers, and is advancing the biggest expansion of airline consumer rights in more than a decade.”  In addition, it is pursuing rules that would (i) mandate passenger compensation when airlines cause flight delays or cancellations; (ii) guarantee refunds for services not actually provided (such as broken Wi-Fi); (iii) ensure greater fee transparency to avoid surprises at checkout; and (iv) ensure fee-free family seating.

Hats off to what appears to be a re-energized agency, getting more aggressive in protecting the travelers within its charge.  Hopefully, an indication that airline passengers no longer need to feel so helpless in taking whatever mistreatment their carrier may wish to dole out.

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