Southwest agrees to $140 million penalty for 2022 Christmas travel fiasco

Southwest Airlines has agreed to pay a $140 million civil penalty for last year's Christmas travel fiasco that resulted in 16,900 flight cancellations and 2 million stranded passengers, according to the United States Department of Transportation.

A Monday press release from the DOT described the airline's massive operational failure as a "holiday meltdown." The penalty imposed by the department is "30 times larger than any in DOT history," it noted.

"DOT ensured Southwest paid over $600 million back to passengers and issued record penalty," the press release stated, "to deter other airlines from failing to protect customers during disruptions."

A portion of the fines, $90 million, will compensate future Southwest passengers with travel vouchers for $75 or more if operational failures impact them. The airline must pay a $35 million penalty to the U.S. Treasury.

"Southwest will receive a $72 million offset toward the penalty for the $90 million compensation system DOT has ordered. Also, DOT will credit Southwest $33 million against the penalty for issuing 25,000 Rapid Reward points to passengers impacted by Southwest's operational failures," the department stated.

DOT Secretary Pete Buttigieg touted the department's actions against Southwest.

"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," Buttigieg said. "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 department conducted a "rigorous and comprehensive investigation" into the airline's operations, which included "examining tens of thousands of pages documents [sic], conducting several multi-day, in-person audits and site visits at Southwest's headquarters, reviewing thousands of consumer complaints, and consulting with various third parties, such as airports."

The DOT claimed it found evidence that the airline had "violated consumer protection laws" when it failed to provide reliable access to customer service, timely flight status information, and prompt refunds.

According to the department, travelers were forced to wait hours to contact a customer service representative at Southwest's call center. The airline also failed to send many customers accurate flight status changes. Additionally, Southwest did not properly issue refunds to its customers.

The DOT noted that it has closed its unrealistic scheduling investigation into Southwest "without making a finding" but added that it will continue monitoring all airlines.

On Monday, Southwest CEO Bob Jordan told Reuters that the airline is "absolutely prepared for winter."

"It was a historic storm that led to a historic week of operational disruption," Jordan said of last year's travel debacle. He noted that it "is not going to happen again."

"Southwest shares with the DOT the goal of delivering the highest standard of service to the traveling public and is grateful to have reached a consumer-friendly settlement that both credits past compensation that went above and beyond requirements for Customers and incorporates a future commitment for Southwest Customer care with a new industry-leading compensation policy," the company said in a Monday statement regarding the DOT's investigation.

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