In December 2022, during the peak holiday travel season, Southwest Airlines experienced a meltdown. As part of a US$140 million settlement with the US Transportation Department, the airline announced the launch of a compensation program for aircraft delays.
In December 2023, Southwest committed to a three-year plan to award travel vouchers worth US$90 million to travellers who experience delays of three hours or more reaching their final destinations due to airline-caused issues or cancellations. The program is scheduled to begin on April 30.
The airline announced on Monday that it had quietly started the program on April 16 and had already received requests for coupons from a few thousand passengers.
Following the holiday catastrophe that left 2 million customers stranded and 16,900 flights cancelled, the airline consented to the compensation program. One of the settlement’s financial penalties was US$35 million.
Travel horror stories about people missing funerals or eagerly anticipated holiday gatherings, passengers whose flights were cancelled and forced to make 17-or longer-distance drives, and cancer patients who were unable to receive treatment were sparked by a massive winter storm that hit December 2022 and the chaos that followed.
The Biden administration’s vigorous efforts to tighten regulations on airlines, including the requirement for increased passenger compensation, include the delay compensation scheme. Southwest stated that vouchers will be distributed “upon request.”
Given its operational performance, Southwest CEO Bob Jordan stated in December that the US$30 million in vouchers yearly was “the right number” to commit to.
When asked if the three-year program would terminate, Jordan from Southwest responded that customer programs “rarely change or go away.”
rival US airlines are not yet required to implement comparable programs, nor have they done so.
In May of last year, President Joe Biden announced that before the end of the year, the Department of Transportation (DOT) would put out new regulations mandating that airlines pay customers in cash for major, controlled flight delays or cancellations. Congress has declined to require compensation for delays in a planned aviation reform measure, and the DOT has not released its proposal.
Under the delay compensation rule, Southwest will “really lead the market and it will be very interesting to see how other airlines respond – not as punishment but by way of competition,” according to remarks made by Transportation Secretary Pete Buttigieg last week.
None of the carriers responded when the DOT asked them in 2022 if they would pay at least $100 US for airline-caused delays of at least three hours.
In August 2022, the majority of airlines—including Southwest—voluntarily promised to cover lodging, food, and ground transportation costs in the event of airline-caused delays or cancellations; but, they declined to offer monetary compensation, as mandated by EU regulations.
