Southwest Fined $140 Million Over 2022 Holiday Season Meltdown

Southwest Airlines currently owns the largest fleet of Boeing 737 MAX airframes among U.S. based carriers. During their second-quarter earnings announcement, airline CEO Gary Kelly said they were optimistic to start flying the 737 MAX by the end of 2020.

The figure comes after the U.S. Department of Transportation announced a $140 million civil penalty against Southwest for “numerous violations of consumer protection laws” during the network-wide chaos, causing over 16,000 flights to be cancelled and over two million flyers displaced.

Penalty Includes Credit for $90 Million Compensation Fund, Rapid Rewards Deposits

According to the Transportation Department, the $140 million civil penalty is based on three major shortcomings by the airline during the network meltdown. First, the administrative body says Southwest did not provide adequate customer service, as flyers were “often met with busy signals, hours-long queues to connect with agents, or dropped calls.” The carrier was also accused of not providing timely updates on flight status, as well as failing to provide refunds in a “prompt and proper manner.”

Although the announced fine was $140 million, Southwest will only pay $35 million to the U.S. Treasury. The company will receive a $72 million offset for creating a $90 million compensation fund for future travel vouchers.

“In the event Southwest causes a passenger to arrive at their destination three hours or more after their original scheduled arrival time due to an issue within Southwest’s control, Southwest is required to provide the passenger with a transferrable $75 voucher for future use on the airline,” the Transportation Department said in a statement.

Southwest will also get a $33 million credit on the penalty for providing each affected flyer with 25,000 Rapid Rewards miles in compensation.

“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,” said U.S. Transportation Secretary Pete Buttigieg. “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.”

The civil penalty is in addition to around $600 million in refunds provided to travelers who were directly affected by the incident. The Transportation Department says the $140 million fined “is 30 times larger than any previous DOT penalty for consumer protection violations.”

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