Southwest Airlines has reached a $140 million settlement to resolve a federal investigation into a major flight-cancellation debacle that occurred in December 2022 during the holiday season.
The settlement includes a $35 million fine, which is the largest ever imposed by the U.S. Department of Transportation on an airline for violating consumer protection laws.
Driving the news: The majority of the settlement will be used to compensate future passengers as an incentive for Southwest to avoid repeating similar incidents.
- The investigation found that Southwest violated the law by failing to assist stranded customers, not providing timely updates on canceled and delayed flights, and delaying refunds.
- Southwest disputed many of the findings but agreed to settle the matter.
The big picture: The airline had already incurred over $1.1 billion in costs related to refunds, reimbursements, and lost ticket sales due to the flight cancellations.
- As part of the settlement, Southwest will provide $33 million in credit for compensation already provided to affected customers and distribute $90 million in vouchers to future travelers.
- Starting from spring 2024 until April 2027, Southwest will offer a minimum $75 voucher to passengers who experience a delay or flight cancellation lasting at least three hours caused by the airline.
- The settlement also includes measures to improve Southwest’s operations during extreme weather conditions, such as adding de-icing equipment and increasing staff at key airports.
- In exchange for the settlement, the government did not pursue allegations that Southwest knowingly advertised flight schedules it could not keep.
