Passengers could get $75 for delays under Southwest settlement

Southwest Airlines passengers affected by the company’s problems a year ago could be given a $75 voucher for delays as part of the federal government’s record $140 million settlement.

The settlement, announced Monday by the Department of Transportation (DOT), will require Southwest to establish a $90 million compensation system to be used for passengers affected by “controllable cancellations and significant delays.”

As part of this new system, Southwest is required to give passengers a transferrable $75 voucher for future travel with the airline in the case that an “issue within Southwest’s control” causes a passenger to arrive at their destination three hours or more after their original scheduled arrival time.

“This industry-leading benefit will ensure that Southwest passengers impacted by any future significant disruptions will receive not only flight rebooking, hotels, and food during the delay, but also timely compensation from Southwest due to the inconvenience,” the DOT said in a statement.

The $140 million settlement is the largest penalty against an airline for violating consumer protection laws, the DOT said.

In addition to the compensation system, Southwest is required to pay $35 million to the federal government. Southwest will receive a $72 million credit from DOT for the future vouchers, along with $33 million for the compensation the airline already gave to customers, primarily in the form of frequent flyer points.

Southwest has already paid more than $600 million in ticket refunds, expense compensation and frequent flyer points, which the airline calls “Rapid Rewards.”

The lawsuit follows the DOT’s nearly yearlong investigation into last December’s meltdown, which included more than 16,900 flights were cancelled or delayed, and affected more than 2 million passengers around the holidays.

The investigation further found Southwest failed to provide “adequate customer service assistance,” with customers often getting busy signals, hours-long queues or dropped calls when trying to speak with agents. DOT’s probe found Southwest’s call center was overwhelmed, though the airline claimed it “quickly increased call center capacity” to meet the high volume of calls.

The DOT further claimed Southwest failed to promptly notify passengers, with many customers reporting they did not receive any notifications while some received inaccurate ones.

According to the suit’s consent order, Southwest argued it sent emails and texts encouraging passengers to check their flight statuses. The airline noted there was delay in getting these automated messages out, while the “majority” of passengers received updates at least 4 hours ahead of their scheduled flight.

“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 statement. “Taking care of passengers is not just the right thing to do — it’s required, and this penalty should put all airlines on notice to take every step possible to ensure that a meltdown like this never happens again.”