Southwest Airlines launches compensation program for flight delays

By David Shepardson

WASHINGTON (Reuters) -Southwest Airlines said it had launched a compensation program for flight delays as part of a $140 million U.S. Department of Transportation settlement over the carrier's meltdown in December 2022 during a busy holiday travel period.

Southwest in December 2023 agreed over three years to provide $90 million in travel vouchers of $75 or more to passengers delayed at least three hours getting to final destinations because of an airline-caused issue or cancellation, and to start the program by April 30.

The airline said on Monday it had quietly launched the program on April 16 and has already heard from a few thousand customers seeking vouchers.

The airline agreed to the compensation program after the holiday meltdown that resulted in 16,900 flight cancellations and stranded 2 million passengers. The settlement included a $35 million cash fine.

A massive winter storm in December 2022 and subsequent chaos prompted travel horror stories such as people missing funerals or long-awaited holiday gatherings, passengers with canceled flights forced to make cross-country drives of 17 or more hours and some cancer patients being unable to get treatment.

The delay compensation program is part of the Biden administration's aggressive efforts to get tough on airlines as it aims to require new passenger compensation. Vouchers will be awarded "upon request," Southwest said.

Southwest CEO Bob Jordan said in December the $30 million in vouchers annually was "the right number" to commit to given its operational performance.

Asked if Southwest would end the program after three years, Jordan said consumer programs "rarely change or go away."

Rival U.S. airlines have not put in place similar programs and do not yet face a mandate to do so.

President Joe Biden said last May that the DOT would propose new rules requiring airlines compensate passengers with cash for significant controllable flight delays or cancellations by the end of the year. The DOT has not issued its proposal, and Congress has declined to mandate compensation for delays in a pending aviation reform bill.

Transportation Secretary Pete Buttigieg said last week Southwest under the delay compensation requirement 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."

The DOT in 2022 asked carriers if they would pay at least $100 for delays of at least three hours caused by airlines and none agreed.

Most carriers - including Southwest - voluntarily committed in August 2022 to provide hotels, meals and ground transportation for airline-caused delays or cancellations but resisted providing cash compensation as is required in the European Union.

(Reporting by David Shepardson; Editing by Jamie Freed)