Southwest Airlines will be fined $140 million for violating customer protection laws during its failed 2022 leisure travel business, the U.S. Department of Transportation announced Monday morning.
It was by a factor of 30 the largest penalty ever against an airline for consumer protection violations, the DOT said, part of a move by the Biden administration to crack down on airlines for unreliable operations, hidden fees and other practices that the government has characterized. as anti-consumer.
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The fine includes $35 million to be paid to the federal government as a penalty. The rest of the money will be used to set up a compensation system for passengers affected by future flight cancellations or significant delays – three hours or more – caused by something within the airline’s control. The DOT said the airline must set aside $90 million under that system to issue passenger transferable vouchers worth at least $75.
The airline received a $33 million credit for the Rapid Rewards points penalty it issued last year as an apology to affected passengers. The fine was also offset by $72 million to free up money for the compensation fund, DOT said, both of which “recognize Southwest’s efforts and will encourage other airlines to follow suit and be proactive during operational disruptions.”
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In a statement, Southwest said it is pleased that a settlement has been reached with the DOT regarding the fine.
“Southwest shares the DOT’s goal of providing the highest level of service to the traveling public and is grateful to have reached a consumer-friendly settlement that both credits Southwest compensation for going above and beyond customer requirements and a future obligation for the Southwest customer includes… care with a new, industry-leading compensation policy.”
More than two million passengers were stranded during the 2022 episode as Southwest canceled 16,900 flights as it struggled to regain its footing after a severe winter storm ripped through several of its major airports, even as other airlines managed to restore operations once the weather passed used to be. .
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Southwest previously paid more than $600 million in refunds and expense reimbursements to passengers and said the storm cost it more than $1 billion.
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Over the past year, the airline has spent more than $1 billion on improvements to its systems, upgrading software and technology, hiring more staff, purchasing more de-icing equipment and changing the way it manages its network during disruptions.
The airline has pointed to its overall reliability over the past year, including during holidays and big travel weekends, as well as during an IT problem in April, as evidence that its investments are paying off.
Millions of Americans are expected to travel for the holidays in the coming days. While conditions are expected to largely clear after a storm battered the East Coast on Monday and Tuesday, forecasts are always subject to change.
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