The U.S. Department of Transportation (DOT) announced that it will issue an $11 million credit to Southwest Airlines for the remainder of the record $140 million penalty it owed over its operational meltdown during holiday travel in 2022.
“In lieu of a payment of an $11 million civil penalty to the government, this order provides Southwest with an $11 million credit for significantly improving its on-time performance and completion factor through its $112.4 million investment in its Network Operations Control (NOC),” the DOT said in an updated order this week.
The DOT said the action would incentivize airlines to make investments towards improving their operations and resiliency that directly benefits customers.
“This credit structure allows for the benefits of the airline’s investment to be realized by the public, rather than resulting in a government monetary penalty,” DOT added.
In a statement to ABC News, the DOT said that Southwest had “agreed to invest the remaining amount due under the fine towards system improvements that directly benefit passengers.”
“This is a better solution than sending the money to the U.S Treasury because the benefits will go to the traveling public. This order does not impact customer refunds,” the statement said.
The Biden administration imposed the $140 million civilian penalty on the airline in 2023 – the largest against an airline in history.
Most of the fine required Southwest to upgrade its technology and procedures to improve reliability and to compensate passengers for any future cancellations or significant delays caused by the airline.
Under the penalty, Southwest was also required to pay $35 million to the U.S. treasury in three installments – two installments of $12 million and one installment of $11 million. The final installment of $11 million, which was due on Jan. 31, is no longer owed to the government, according to the DOT.
In a statement to ABC News, Southwest said the airline “is grateful to Secretary Duffy and the DOT Team for recognizing Southwest’s significant investments in modernizing our operations. During the last two years, Southwest successfully completed an operational turnaround that directly benefits our Customers with industry leading on-time performance and percentage of completed flights without cancellations.”
As a massive winter storm battered the U.S. during the 2022 holiday season, the airline cancelled more than 16,900 flights, stranding more than 2 million passengers, the DOT said at the time.
In addition to the fine imposed by the DOT, the airline agreed to pay about $600 million in refunds and reimbursements to customers, the DOT said at the time it imposed the penalties.
