U.S. Fines Southwest Airlines $140 Million for Holiday Meltdown

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.

Of the $140 million, Southwest Airlines will pay $35 million to the federal government. For the remaining amount, the department is giving the airline credit for providing frequent-flier points as an apology to customers affected by the meltdown, and for agreeing to give out tens of millions of dollars in vouchers to customers affected by future delays and cancellations.

The fine is roughly 30 times what had previously been the department’s largest penalty against an airline for consumer protection violations, a $4.5 million settlement with Air Canada in 2021 over customer refunds.

“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.”

The department said that Southwest had run afoul of consumer protection laws by failing to provide prompt customer service, flight notifications and refunds to passengers affected by the meltdown. In a statement, Bob Jordan, Southwest’s chief executive, said the airline had worked since last winter to improve its service.

“We have spent the past year acutely focused on efforts to enhance the customer experience with significant investments and initiatives that accelerate operational resiliency, enhance cross-team collaboration and bolster overall preparedness for winter operations,” Mr. Jordan said.

As part of the announcement on Monday, the Transportation Department said it would require Southwest to hand out at least $90 million in vouchers to customers who experience severe disruptions caused by the airline in the future. Under that policy, which the airline plans to put in place by May, passengers will be able to request a voucher of $75 or more if they arrive at their final destination at least three hours late because of factors within Southwest’s control. That voucher would be in addition to compensation provided for hotels and food.

The fine against Southwest comes nearly a year after the holiday meltdown, which…