Massive Settlement Reached in Southwest Airlines Case

Massive Settlement Reached in Southwest Airlines Case

( – When people book a flight, they typically make allowances for hiccups, such as minor delays due to the weather. They don’t expect to end up stranded in the airport because of a computer meltdown. Yet, that’s precisely what happened in December 2022, when Southwest had to cancel around 17,000 flights due to a winter storm that later led to scheduling snafus for airline crews. It caused such a fiasco that it resulted in a federal investigation. The airline has now reached a settlement with the US Department of Transportation.

The Massive Snafu

Winter storms happen, and they often throw people’s plans into chaos. However, it’s not the fact that the weather kept flights from taking off that’s at the heart of the issue — it was Southwest’s reactions or lack thereof. When the weather caused canceled or delayed flights, the company relied on scheduling software to place crews on replacement flights. However, the rescheduling system couldn’t meet the demand, leaving thousands of travelers stranded with no way to get to their destinations in one of the biggest meltdowns ever seen in the industry.

The federal investigation found that the airline “violated the law on numerous occasions,” including failing to notify its passengers that the airline was experiencing flight issues, a mandatory requirement. Airlines must keep travelers updated within 30 minutes of any delays or cancellations. Additionally, Southwest failed to issue timely refunds.

Settlement Terms

The settlement agreement consists of the airline paying $140 million, most of which will compensate future travelers. That figure also includes a $35 million fine. The government is also giving Southwest $33 million in credit for the reimbursements it has already distributed, mainly as frequent flier points. The airline committed to providing $90 million in vouchers to future passengers who experience “controllable cancellations and significant delays,” per a press release from the Department of Transportation.

Additionally, under the settlement, Southwest Airlines passengers who suffered through the company’s issues last year could apply for a transferable $75 voucher to apply to future travel. A SWA spokesperson told media outlets the company was “grateful to have reached a consumer-friendly settlement” and that it had “learned from the event.”

Even before it agreed to the settlement, Southwest noted that it had experienced $1.1 billion in losses stemming from reimbursements, lost ticket sales, and extra costs such as covering food and hotel stays for those left without an alternative.

In a statement after reaching the settlement, Transportation Secretary Pete Buttigieg said the “penalty should put all airlines on notice to take every step possible” to avoid a repeat of this incident. It’s the largest penalty the DOT has levied against an airline for violating consumer protection laws.

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