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Southwest Airlines fined $140 million for holiday meltdown that stranded millions

Southwest Airlines fined $140 million for holiday meltdown that stranded millions

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However, the airline will pay much less for implementing a $90 million fund to compensate travelers affected by future delays.

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Southwest Airlines passengers at an airport in Texas
Image: Jason Fochtman / Houston Chronicle via Getty Images

Southwest Airlines is facing a $140 million fine after last year’s holiday meltdown left millions of passengers stranded at airports across the US. On Monday, the Department of Transportation announced it’s imposing the civil penalty over “numerous violations of consumer protection laws” during and after the mass cancellations.

Following an investigation, the DOT found Southwest failed to “provide adequate customer service assistance,” stating passengers stranded at airports were met with busy signals, long queues, and dropped calls when trying to get in touch with the airline. The DOT says Southwest didn’t provide timely or accurate flight status notifications to customers, either, and also failed to provide prompt refunds to “thousands” of passengers.

The $140 million fine includes a $35 million payment to the US Treasury. However, the DOT says Southwest Airlines will get a $33 million credit for issuing 25,000 Rapid Rewards points to affected passengers. The agency will also lower its fee by $72 million because Southwest has been ordered to establish a $90 million compensation system for travelers affected by delays and cancellations in the future. Under the new system, Southwest will provide a $75 transferrable voucher for passengers if they arrive at their destination three or more hours after their scheduled arrival time.

Last December, Southwest canceled thousands of flights before and during the holidays as a winter storm slammed a large portion of the US. The incident left 2 million passengers without flights to their destinations, forcing them to rebook itineraries scheduled several days out. Southwest also suffered a networking glitch in April of this year, causing hundreds of delays throughout the country. Southwest denies that it violated consumer protection laws and doesn’t admit any wrongdoing, according to the DOT’s consent order.

“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,” US Transportation Secretary Pete Buttigieg said in a statement. “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.”

In addition to the fine, Southwest Airlines paid over $600 million in reimbursements to travelers who needed to book hotels and ground transportation due to the cancellations. The DOT’s new requirements should hopefully guarantee payments for Southwest passengers dealing with all of the inconveniences that come along with delayed flights.