BBC reported the U.S. Department of Transportation (DOT) has fined Southwest Airlines a whopping $140 million for last year’s holiday meltdown that canceled roughly 17,000 flights and stranded more than 2 million passengers.
The media outlet noted the penalty imposed on Southwest is about 30 times more than other previous fines against an airline in U.S. history. The DOT cited “consumer protection” violations and stated that the majority of the penalty will go toward compensating future Southwest passengers who experience cancellations or substantial delays caused by the airline.
U.S. Transportation Secretary Pete Buttigieg said the DOT’s action sets a new precedent and sends a clear message to airlines. “If airlines fail their passengers, we will use the full extent of our authority to hold them accountable. 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,” Buttigieg said.
In a recent segment with Squawk on the Street, Southwest CEO Bob Jordan said the airline is prepared going into the holiday season and expressed his confidence in the company’s strong momentum heading into 2024.
Assuming the fine isn’t knocked down to $10 dollars, any ideas were the fine proceeds go??
“ The DOT cited “consumer protection” violations and stated that the majority of the penalty will go toward compensating future Southwest passengers who experience cancellations or substantial delays caused by the airline.”
Who knows. And what about the scheduling systems that have always plagued SWA? Are those being replaced? If so that’s at least 12-18 month project. So how can Jordan be so confident this season will be without drama?
The fines should go into staffing controllers. That seems to be the highest FAA priority.
Fines are counterproductive in this case. They will do nothing to compensate the impacted customers and further stress an airline that is valuable competition in an already stressful industry by making Southwest less competitive. There is nothing the government can do via a fine that the free market has not already done to Southwest. The fine is just punitive and appears to be protectionist for competing airlines.
Couldn’t agree more.
You said it before I could. $140 million could go towards updating their systems, but no, into the vast pit of the bureaucracy!
I disagree with your assessment of Southwest as “competition” for legacy airlines.
Their catch as catch can seating process and general culture makes them essentially an airborne bus – with all the unpleasantness that entails. Current Airline flight practices have already deteriorated to a shameful degree among even “regular” airlines. Southwest’s customers seem to behave barely batter than cattle. Yes I’ve seen people wearing pajamas and flip flops on legacy airlines, but Southwest’s customer base appears to be those who gravitate towards the lowest common denominator. Those are the folks who think that arrival at the destination alive is the only factor. Customers are treated poorly enough already. We don’t need to encourage even less consideration.
Essentially Southwest isn’t in the same operating universe as even the current legacy airlines. Anyone will fly the legacy airlines, NOT everyone will fly Southwest.
Correct me if I’m wrong, but how exactly does any fine help in situations like this? “Were from the government. We’re here to help. Give us $140,000,000.”
Who fines the FAA for actual safety lapses when controllers mess up?
Who fines the FAA when passengers are inconvenienced because of ground stops due to sector saturation in the 1960’s vintage traffic management system?
Who fines the FAA for gaps in safety by having virtually no safety inspectors in the field and allowing airlines to police themselves and offloading their pilot certification responsibilities onto a cohort of retired part-time DPEs who do what they want when they want for however much they want to charge?
Secretary Buttigieg, let’s talk about how much your departments bill is.
THIS! I see where FAA radar trouble this week has stranded tens of thousands. Who is going to fine the government? I guess only private companies make mistakes. But never the gubmit’.
Please excuse my skepticism, Pete, but this regime will have blown through that $140 million long before any “future Southwest passengers who experience cancellations or substantial delays caused by the airline” jump through the bureaucratic hoops seeking compensation from Government, with potential halts at every step of the process, for the actions of an apparently private business entity.
SecDoT has made a full blown effort in the media for months now bashing airlines and chest thumping. While some bashing may be warranted, it would be nice if he would clean his own house as well by getting the FAA workforce up to full manning levels. And Congress critters share the blame for that fiasco with their lack of a reliable and sufficient funding stream.
This is bad in just about every way (as expressed rather well in the comments already).
On the one hand, the airline already lost $1.2B in the event itself, so how much more “punishment” does it need? Does anybody think that until this extra $140M, Southwest wasn’t motivated to make improvements?
On the other hand, the money doesn’t go to anybody who was affected. It goes to the DOT. What benefit is that? Motivation to assess other fines, perhaps?
It appears that most of the fine goes into an escrow type account to compensate future stranded passengers. It isn’t money taken, just set aside.
Nevertheless, even though a lot of airline cancellations are government imposed, sometimes cancelling a flight is the safest thing to do. It’s always a conundrum for pilots and dispatchers.
New fatigue rules play a big role too. In a nutshell, in the past, if a pilot’s schedule for the day started legal, you could finish as scheduled even if delayed. Now, you can taxi out legally, but if delayed for something like deicing, or wind changing active runway use, or myriad other reasons, you can reach a point where the computer shows that you’re going to land just a few minutes over your legal duty day, even hours later. (Time that can often be made up in flight.) The crew is forced to taxi back to the gate, which causes a whole new set of problems that cascade through the system, as often gates and replacement pilots aren’t readily available. These are new cancellations forced by tighter fatigue rules that wouldn’t have happened prior to the rules being changed.
Those rules were in place at KLM and are a big factor in the Tenerife disaster. The Dutch crew had just a few minutes to be legal, and the captain heard what he wanted to hear.
There is always complexity in any real-time system with a variety of inputs, dependent events and non-controllable external factors. Adding a $140M fine a year later seems purely political, and would be far more useful to the general public interests if SWA was directed to invest the fine amount in improvements of their scheduling system. I don’t see how fining SWA $140M can possibly improve the scheduling system capacity to accommodate traffic growth and scheduling complexity, as well as mitigate the impact of adverse weather. If you want to make it bigger and better, you should add resources, not siphon the resources away. Perhaps, the fine could be allocated towards the cost of implementing future FAA regulations.
Couldn’t agree more! This does nothing to improve the system—“The floggings will continue until morale improves.”
“I’m from the FAA, and I’m here to help!” (And they wonder why they are the objects of disdain in the industry!)
You gotta love the wisdom of big government. This is the government that can’t balance their budget, is 33 trillion in debt , and causes inflation of 7%, this stealing from the buying power of people’s savings.
I remember when the DOT first came up with ranking airlines according to on time performance.
My airline came it dead last. Why ? Because we didn’t leave people behind. We would delay flights for connections , especially the last flight to that destination.
Now we slam the door in the passnegers face and they haven’t even finished laoding the cargo, but it’s past departure time.
I always wondered if some day we would skip boarding the entire plane because we had to be on time.
My wish for Christmas is for people to read first and react second. The big, bad, government gets 35 million dollars, to be paid over three years, of the 140 million dollar settlement. The rest goes into a fund, setup and controlled by Southwest, to use to reimburse future passengers whose flights are delayed more than 3 hours due to conditions totally under Southwest’s control. So basically if Southwest doesn’t have another meltdown they are out a whopping 35 million dollars for canceling almost 17,000 flights.
Of the $140 million that Southwest has been penalized for violating consumer protection laws, $35 million will go to the U.S. Treasury. Fortunately for the airline, Southwest will not be charged the whole amount. The company will receive a $72 million offset due to the implementation of the $90 million compensation system.
The majority of the remaining $ 90 million dollar penalty will be allocated to compensating future Southwest passengers affected by cancellations or significant delays caused by the airline. Additionally, the U.S. Department of Transportation (DOT) ordered through the courts that Southwest provided over $600 million in refunds and reimbursements to passengers who faced travel disruptions during the operational meltdown.
I don’t really get the concept of the federal government fining a private sector company for doing a poor job. Can the federal government fine itself?! I mean, it’s a classic examample of the pot calling the kettle black.
” Poor Job ” done in the private sector –yes, they can fine–the private sector- in this case and in any case involving ‘common carriers’- be it bus lines, rail lines, airlines, pax carrying ship lines, etcetera, as they all fall under the umbrella of laws and regulations that the U.S. Government is empowered by Congress to enforce.
They enforce these rules and regulations through the DOT.
Transportation law is a broad legal field encompassing federal and state transportation statutes. These laws involve transportation infrastructure and all forms of road, railway, water and air transport.
Transportation law may apply to:
Surface vehicles, including cars, trucks, motorcycles, buses and bicycles.
Aircraft, including planes, helicopters and drones.
Watercraft, including boats, ships and freighters.
Railroad systems, including trains and subways.
Infrastructure, including roads, bridges, railways, airports, shipping ports and trails.
Federal Transportation Law
Congress is authorized to regulate interstate commerce under the U.S. Constitution. This means that travel between the states is subject to several federal laws and regulations.
The U.S. Department of Transportation (DOT) is the umbrella agency of enforcement for all federal transportation policies and regulations.
Federal Register
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And in this particular SWA case, bear in mind that SWA signed off on the particulars of the brokered ‘deal.’ (In order for SWA to obtain that $72 million dollar ‘off-set.’)