Southwest Airlines settled a federal lawsuit over its holiday meltdown last December that caused thousands of flight cancellations and delays for millions of travelers for $140 million, the airline announced Monday.
The agreement with the Department of Transportation (DOT) marks the largest penalty levied against an airline for violation of consumer protection laws, the government said.
Southwest agreed to pay $35 million in cash to the DOT over three years, while the majority of the settlement — about $90 million — will go toward compensation of future passengers to avoid similar issues.
In a consent order announcing the settlement, the DOT said it found Southwest “violated the law on numerous occasions,” which included failing to help stranded travelers.
Transportation Secretary Pete Buttigieg on Monday said he hopes the lawsuit provides an incentive for airlines to prevent similar travel debacles in the future.
“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 statement.
“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,” Southwest Airlines President and CEO Bob Jordan added.
The lawsuit comes after a nearly year-long probe into the meltdown, which saw the cancellation or delays of over 16,900 flights impacting over 2 million passengers, the DOT said.
Southwest has already paid over $600 million in ticket refunds, expense reimbursements and “goodwill gestures,” that included additional Rapid Rewards points for traveler’s accounts, the airline said. These came both during and after the travel disruption.
The airline on Monday said it had increased call center capacity after the meltdown, noting a record number of calls during the period from customers seeking assistance. The DOT’s investigation found Southwest failed to provide “adequate” telephone customer service assistance, a claim that the airline pushed back on in the consent order.
–Updated at 8:44 a.m.