Southwest Airlines will pay a $35 million fine as part of a $140 million agreement to settle a federal investigation into a debacle in December 2022, when the airline canceled thousands of flights and stranded more than 2 million travelers over the holidays, the Associated Press reports.
Most of the settlement will go toward compensating future passengers, which the U.S. Department of Transportation considers an incentive for Southwest to avoid repeating last winter’s mess.
The government said the assessment was the largest it has ever imposed on an airline for violating consumer protection laws.
The assessment stems from nearly 17,000 canceled flights a year ago, starting as a winter storm paralyzed Southwest operations in Denver and Chicago and then snowballing when a crew rescheduling system couldn’t keep up with the chaos.
Even before the settlement, the nation’s fourth-largest 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.
The settlement provides that in addition to the $35 million fine, Southwest will get $33 million in credit for compensation already handed out, mostly for giving 25,000 frequent flyer points each, worth about $300, to affected customers. The company promised to give out $90 million in vouchers to future travelers.
