The Department of Transportation is waiving part of a fine owed by Southwest Airlines after thousands of flights were canceled during a brutal winter storm in 2022 – and the move may improve flying for all passengers.
The Biden administration imposed a $140 million civil penalty on the company in 2023 – the largest against an airline in history – after Southwest canceled 17,000 flights and stranded more than 2 million travelers during the paralyzing snowstorm.
Most of the money went toward compensation for impacted travelers. However, Southwest also agreed to pay $35 million to the U.S. Treasury – $12 million in 2024 and another $12 million earlier this year.
The Transportation Department issued an updated order Friday waiving the final $11 million, which was due January 31, 2026.
“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 Network Operations Control,” the Department of Transportation said in the updated order.
The agency noted it believes this action will incentivize other airlines to improve their operations and resiliency.
“This credit structure allows for the benefits of the airline’s investment to be realized by the public, rather than resulting in government monetary penalty,” the agency added.
In a statement to ABC News, transportation officials said that Southwest “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 read.
The fine stemmed from a devastating winter storm in the days following Christmas 2022 that cut off Southwest’s operations in Denver and Chicago, and then caused thousands of flights to be canceled. Across the country, airlines struggled to operate amidst the intense winter weather, which added even more strain to the already-busy holiday rush.
Southwest was the hardest hit, having canceled 17,000 flights related to the storm. Federal transportation officials deemed the widespread cancellations unacceptable, with the Department of Transportation launching its investigation.
The Biden administration later found that Southwest had violated the law by failing to help customers who were stranded in airports and hotels – leaving many to fend for themselves by finding new means of transportation during the busy holiday season.
Many travelers who called the airline’s overwhelmed customer service center got busy signals – or were stuck on hold for hours before reaching someone to help.
Even before the settlement, the meltdown cost Southwest more than $1.1 billion in refunds and reimbursements.
Following news of the fine being waived, Southwest thanked Secretary of Transportation Sean Duffy and the Department of Transportation for “recognizing Southwest’s significant investments in modernizing our operations.”
“During the past 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.”
With reporting by the Associated Press.
