DOT Penalizes Southwest Airlines: $140 Million Fine And Required Vouchers For Delayed Passengers

The fines against Southwest Airlines are a result of an unpleasant 2022 holiday season. During the peak travel period between Christmas and the New Year, the airline canceled 16,900 flights, leaving over 2 million passengers stranded.

Over the course of this year, the DOT and the Department of Justice’s Consumer Protection Branch investigated the travel debacle. Elements of the investigation included reviews of consumer complaints, in-person audits and site visits to Southwest’s headquarters and consultations with airports. The DOT concluded that Southwest had violated consumer protection laws in the following ways:

• Failing to provide adequate customer service assistance. The DOT found that Southwest’s customer service call center was overwhelmed, leading to customers receiving a busy signal when calling in.
• Failing to provide prompt flight status notifications. The DOT’s investigation revealed that the airline’s system for notifying passengers of cancellations broke down, preventing customers from receiving timely notifications about their flight cancellations or delays.
• Failing to provide refunds in a prompt and proper manner. The DOT found that thousands of customers were not promptly refunded their ticket fares or optional service fees.

These violations have resulted in the DOT imposing a $140 million fine on Southwest and requiring the company to compensate future passengers affected by significant delays and controllable cancellations. This penalty is 30 times greater than any previous penalty the DOT has imposed for consumer protection violations.

The DOT has taken multiple steps to help Southwest customers previously affected by travel mishaps, as well as those who may be impacted in the future.

Compensation System and Travel Vouchers for Delayed Passengers

Southwest will now be required to reserve $90 million in vouchers for future customers impacted by significant delays and controllable cancellations.

What does this mean for the casual Southwest flyer? If the airline causes a passenger to arrive at their destination three hours or more after their scheduled arrival time due to an issue in Southwest’s control, the airline must provide the passenger with a transferable $75 voucher for future use.

Penalty for Violating Consumer Protection Laws

Of the $140 million that Southwest has been penalized for violating consumer protection laws, $35 million will go to the U.S. Treasury. Fortunately for the airline, Southwest will not be charged the whole amount. The company will receive a $72 million offset due to the implementation of the $90 million compensation system.

Further, Southwest will receive a credit of $33 million due to its previous issuing of 25,000 Rapid Rewards points to passengers impacted by the 2022 holiday operation failures.

Refunds and Reimbursements for Affected 2022 Travelers

Just a few months before the holiday chaos, Southwest responded to mounting DOT pressure by overhauling its customer service policies in September 2022. Due to these new policies, Southwest was required to reimburse stranded passengers for the expenses they incurred.

Throughout its investigation, the DOT ensured that Southwest issued over $600 million in refunds and reimbursements to those who faced disruptions during the 2022 holiday season. And as previously mentioned, affected passengers were also provided with 25,000 Rapid Rewards points each.

Read more: Best Southwest Credit Cards of May

While Southwest is ultimately responsible for this mishap and will ultimately pay out as a result, this isn’t always the case when it comes to irregular operations. But, you can be proactive and keep yourself protected. Open up your wallet and look inside to see if you have a credit card that offers trip cancellation or delay insurance coverage. If you don’t, consider adding one to your pocketbook.

A card like the Chase Sapphire Reserve® offers up to $500 in compensation per person after a delay of six hours or if an overnight stay is required. It also covers trip cancellations of up to a whopping $10,000 per person in reimbursement of your canceled trip.

If Southwest Airlines’ operational mishap interrupted your holiday plans last year, you may find solace in the DOT’s investigation and enforcement action. As for the long-term effects of this investigation, Secretary Buttigieg said he hopes other airlines take this as a warning: “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.”