If Southwest pays out less than $30 million in any of those years, it will owe the government a penalty of 80% of any shortfall. The government values vouchers at 80% of their face value, so Southwest received credit for $72 million for the future vouchers, not the full $90 million to be distributed over three years. Starting next spring and running until April 2027, Southwest will provide a voucher of at least $75 to travelers who request them if they reach their destination at least three hours late because of a delay or flight cancellation caused by the airline. The company promised to give out $90 million in vouchers to future travelers. The settlement provides that in addition to the $35 million fine, Southwest will get $33 million in credit for compensation already handed out, mostly for giving 25,000 frequent flyer points each, worth about $300, to affected customers. Still, the carrier disclosed in October that federal officials found its efforts fell short and the carrier could face a civil penalty over its service to customers. Southwest had previously agreed to make more than $600 million in refunds and reimbursements. Southwest has added trucks and other de-icing equipment and will increase staff during extreme cold temperatures at key airports such as Denver, CEO Robert Jordan said. Southwest said the 2022 storm that produced record cold temperatures, blizzards and power outages a few days before Christmas created “unanticipated operational challenges.” The airline said it quickly began reimbursing travelers for meals, hotels and alternative transportation and also distributed frequent flyer points. Still, the company said it entered the agreement just to settle the matter. Southwest said that only a small percentage of refunds were issued late and that it never gave false promises about long wait times for reaching customer service during weather-related disruptions. In the consent order, Dallas-based Southwest disputed many of the Transportation Department’s findings. Others didn’t receive immediate refunds for things like pet fees and boarding upgrades that went unused because of canceled flights, according to the department. People who made a mistake entering details in refund requests to a special Southwest website were not told to fix the error they simply didn’t get the money. The government also charged Southwest did not provide refunds quickly enough. Some said they never got an email or text notice and couldn’t access Southwest’s website. Southwest also did not keep customers updated about canceled and delayed flights, failing to fulfill a requirement that airlines notify the public within 30 minutes of a change. Many who called the airline’s overwhelmed customer service center got a busy signal or were stuck on hold for hours. The government said in a consent decree dated Friday that Southwest “violated the law on numerous occasions,” including by failing to help customers who were stranded in airports and hotels, leaving many of them to scramble for other flights. Even before the settlement, the nation’s fourth-biggest airline by revenue said the meltdown cost it more than $1.1 billion in refunds and reimbursements, extra costs and lost ticket sales over several months.
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