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Under a 2023 settlement reached by the Biden administration,
Southwest agreed to a $140 million civil penalty. The government
said at the time that the penalty was the largest it had ever
imposed on an airline for violating consumer protection laws.
Most of the money went toward compensation for travelers. But
Southwest agreed to pay $35 million to the U.S. Treasury.
Southwest made a $12 million payment in 2024 and a second $12
million payment earlier this year. But the Transportation
Department issued an order Friday waiving the final $11 million
payment, which was due Jan. 31, 2026.
The department said Southwest should get credit for
significantly improving its on-time performance and investing in
network operations.
“DOT believes that this approach is in the public interest as it
incentivizes airlines to invest in improving their operations
and resiliency, which benefits consumers directly,” the
department said in a statement. “This credit structure allows
for the benefits of the airline’s investment to be realized by
the public, rather than resulting in a government monetary
penalty.”
The fine stemmed from a winter storm in December 2022 that
paralyzed Southwest's operations in Denver and Chicago and then
snowballed when a crew-rescheduling system couldn’t keep up with
the chaos. Ultimately the airline canceled 17,000 flights and
stranded more than 2 million travelers.
The Biden administration determined that Southwest had violated
the law by failing to help customers who were stranded in
airports and hotels, leaving many of them to scramble for other
flights. Many who called the airline’s overwhelmed customer
service center got busy signals or were stuck on hold for hours.
Even before the settlement, the nation’s fourth-biggest airline
by revenue said the meltdown cost it more than $1.1 billion in
refunds and reimbursements, extra costs and lost ticket sales
over several months.
In a statement, Southwest said it was grateful to the Department
of Transportation and Secretary Sean Duffy for recognizing the
investments it has made to modernize its operations.
“During the last two years, Southwest successfully completed an
operational turnaround that directly benefits our customers with
industry leading on-time performance and percentage of completed
flights without cancellations,” the company said.
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