Southwest Airlines Fined $140M for Poor Response to Winter Storm

WASHINGTON — Southwest Airlines was hit with $140 million in fines Monday from the U.S. Transportation Department as punishment for its Christmastime meltdown last year that stranded 2 million passengers.

It was the biggest fine for an airline in Transportation Department history.

Bad weather contributed to the cancellation of 16,900 Southwest Airlines flights but bad preparation and mismanagement were the main culprits, Transportation Secretary Pete Buttigieg said.

“I think we just gave them 140 million reasons to make sure that this never happens again,” Buttigieg said during an interview on NPR’s “Morning Edition.”

He described the fine as an example of what the Transportation Department might do to other airlines if the kinds of problems that commonly arose in 2022 continue.

“This is about the entire industry sending a signal that you should not be cutting corners because if you fail your passengers, we will hold you accountable,” Buttigieg said.

As part of the settlement, Southwest Airlines developed a “disruption action plan” to manage weather-related disturbances similar to last December’s blizzard during Winter Storm Elliott. The storm, which spanned Dec. 21-26, caused $8.5 billion in damages and killed 106 people.

Other airlines experienced delays but recovered faster. Southwest Airlines was blamed for not having enough airplanes available for the Christmas rush, failing to de-ice planes quickly and lacking adequate call center personnel to handle customer concerns.

Referring to Federal Aviation Administration approval of its disruption action plan, Southwest Airlines said in a statement, “Southwest appreciates acknowledgement that it moved expeditiously to care for customers, learned from the event and now can shift its entire focus to the future.”

Part of the settlement requires Southwest Airlines to set up a $90 million fund to compensate passengers affected by future delays and cancellations.

The $140 million fine follows $600 million the airline already paid in refunds and reimbursements to passengers affected by last year’s Christmas disaster. The fine announced Monday means Southwest Airlines will pay a total of $750 million for its lack of winter storm preparation.

The airline reported a net income of $539 million in fiscal 2022 and $193 million in profits in the third quarter of 2023.

“We have spent the past year acutely focused on efforts to enhance the customer experience with significant investments and initiatives that accelerate operational resiliency,” said Bob Jordan, Southwest Airlines president, in a statement.

The Transportation Department was less upbeat in its assessment of Southwest Airlines.

In addition to poor preparation for the winter storm, the airline engaged in “unrealistic scheduling,” the agency said in a statement.

Unrealistic scheduling refers to airlines that try to maximize income by scheduling more passengers for flights than they can reasonably manage.

“Under federal law, unrealistic scheduling is considered an unfair and deceptive practice, and today’s penalty will deter airlines from engaging in any unfair and deceptive practices against consumers,” the Transportation Department said.

The nonprofit consumer advocacy organization U.S. Public Interest Research Group reported this month that airlines are making improvements this year but many complaints linger.

Complaints against U.S. airlines are on track to break a record this year. There are fewer flight cancellations, but delays, mishandled luggage and damage to wheelchairs show no improvement, U.S. Public Interest Research Group said.

“The question now is — in this fourth consecutive year of airlines angering customers in numbers never experienced before 2020 — what will regulators and lawmakers do about issues that clearly need to be addressed?” the report asks.

You can reach us at [email protected] and follow us on Facebook and X.