DOT waives $11M fine for Southwest Airlines

The U.S. Department of Transportation (DOT) has decided to cancel the remaining $11 million in fines that Southwest Airlines owed, part of a historic $140 million penalty tied to the airline's operational collapse during the 2022 holiday season.

According to the DOT's recent update, instead of paying the final $11 million civil fine, Southwest will receive an $11 million credit for its significant improvements in on-time performance and flight completion, achieved through a $112.4 million investment in its Network Operations Control (NOC) system.

The agency emphasized that waiving the payment encourages airlines to invest in operational upgrades that directly benefit passengers. "This credit structure allows the airlines investments to produce public benefits, rather than simply resulting in a government monetary penalty," the DOT said.

The Biden administration initially levied the $140 million fine in 2023, marking the largest penalty ever imposed on an airline. The majority of the fine required Southwest to enhance its technology and processes to improve reliability and to compensate passengers for future disruptions.

Originally, the fine was to be paid in three installments totaling $35 milliontwo payments of $12 million and a final $11 million due January 31, which has now been waived.

In a statement, Southwest Airlines expressed gratitude, saying the DOT recognized the airlines investments in modernizing its operations. "Over the past two years, Southwest has completed an operational turnaround, delivering industry-leading on-time performance and high rates of flight completion without cancellations," the airline noted.

The 2022 holiday season had seen the airline cancel more than 16,900 flights, affecting over 2 million travelers. Beyond the DOT fines, Southwest also committed to approximately $600 million in refunds and reimbursements to impacted customers.

Author: Lucas Grant