Southwest fined $140 million for last year’s holiday meltdown

The U.S. Department Transportation on Monday said it fined Southwest Airlines $140 million for violating consumer protection laws during last year’s holiday meltdown that stranded millions of customers following severe winter weather.

The DOT said the fine is 30 times larger than any fine it has issued for consumer protection violations. It includes a $35 million cash payment to the government, which Southwest said will be paid over three years. The agency ordered Southwest to set up a fund to compensate future travelers for flight disruptions in the airline’s control. The airline also received credit for $33 million for giving travelers affected by the disruption frequent flyer miles.

“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,” Transportation Secretary Pete Buttigieg said in a news release.

Southwest didn’t provide enough customer assistance during the meltdown or give prompt flight change notifications, the DOT said.

“DOT’s investigation found that Southwest’s call center was overwhelmed, which at times led to a full call center queue and meant customers got a busy signal upon calling the customer service telephone number,” the agency said.

The airline also didn’t provide refunds or reimbursements in a timely manner, the DOT said, citing an audit of the process.

Southwest canceled nearly 17,000 flights during the year-end holiday period last year after it failed to recover as well as rivals did from a severe winter storm, stranding some 2 million people and costing the airline more than $1 billion. It paid more than $600 million in reimbursements and refunds to customers alone.

Speaking at an industry event in New York last week, CEO Bob Jordan vowed that last year’s holiday meltdown “will never happen again,” just days ahead of the busy holiday travel period.

The carrier’s executives have touted a host of improvements this year that they say will help it avoid a repeat of last year. Southwest purchased additional de-icing equipment and upgraded crew scheduling technology that last year fell short of what it needed to reschedule pilots and flight attendants during the disruptions.

Those shortfalls last year contributed to the chaos.

“We have spent the past year acutely focused on efforts to enhance the Customer Experience with significant investments and initiatives that accelerate operational resiliency, enhance cross-team collaboration and bolster overall preparedness for winter operations,” Jordan said in a news release on Monday.