Southwest Airlines' Meltdown Fine

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Southwest Airlines experienced an epic meltdown last holiday season due to its outdated technology. Though it avoided any problems this year, there is still one issue it can’t avoid.

Good morning from Skift. It’s Friday, December 22. Here’s what you need to know about the business of travel today.

Southwest Airlines and its pilots union have reached a tentative deal on a new, five-year labor contract that would raise wages and increase retirement benefits.

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Southwest Airlines and its pilots’ union reached a preliminary labor agreement on Monday, ending three-and-a-half years of tense negotiations. 

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The Department of Transportation has ordered Southwest to pay a $140 million fine for numerous consumer-protection violations that resulted from last year’s holiday travel meltdown. 

With holiday travel coming up, travelers may be thinking back to last year, when a spate of severe winter storms grounded flights across the country just around Christmas, and an operational meltdown at Southwest Airlines dragged on for nearly a week after.

As millions of passengers begin to fill airports for the 2023 holiday season, Southwest Airlines is still facing consequences for last year's holiday travel meltdown. The Department of Transportation (DOT) issued a record $140 million fine against Southwest on Monday, while also introducing new consumer protections and enforcements to help avoid another meltdown, which left thousands of flights canceled and passengers across the United States stranded, from happening again.  “We’re pleased to have reached this consumer-friendly settlement, which includes a new, industry-leading policy to compensate Customers during significant delays and cancellations,” Southwest Airlines shared in a statement about the settlement.  After the holiday travel meltdown of 2022, the Department of Transportation conducted an extensive investigation which found the airline failed to provide prompt refunds and general service to «hundreds of thousands of Southwest customers».  As a result of the investigation, the Department of Transportation says that Southwest will be financially responsible for at least $750 million which includes refunds, future compensation for tickets, and more. In addition to the fine and payments, the DOT enforcement also requires that Southwest establish a $90 million reserve fund for future flight delays and cancellation.  “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 release shares.  Looking ahead to the holiday travel season that is currently underway, Southwest Airlines CEO Bob Jordan said the airline is “absolutely ready” in a recent interview, and that the airline has taken many steps to ensure reliable air service,  Airline passengers this holiday can also utilize new tools from the Department of Transportation, including an interactive dashboard which shows their rights when flying.  “For those who are planning to fly.

The Transportation Department on Monday announced a $140 million fine against Southwest Airlines over a meltdown last winter that disrupted travel for about two million people during the holiday season.