Southwest Airlines unveils innovative compensation plan post-DOT Settlement

Monday, December 18, 2023

Southwest Airlines Co., trading under the symbol LUV on the New York Stock Exchange, today announces a comprehensive agreement with the U.S. Department of Transportation (DOT) in resolution of the DOT’s probe into the impact of the December 2022 Winter Storm Elliot on its operations. This settlement includes a detailed Consent Order, accessible via a provided link, which outlines Southwest’s stance on the DOT’s findings. In a collaborative spirit with the DOT, Southwest Airlines strives to uphold exceptional service standards for travelers. This amicable settlement credits Southwest’s prior compensations to customers, which exceeded obligatory amounts, and establishes a commitment to future customer service enhancements, featuring a pioneering compensation policy. The settlement also entails a singular payment of $35 million to the DOT, distributed over three years.

Southwest’s response to the Winter Storm Elliott incident was prompt and comprehensive, focusing on customer and employee care. The airline faced extraordinary operational challenges but acted swiftly and in compliance with regulations. Key actions taken included:

1. Customer Support Response: Southwest experienced an unprecedented surge in customer calls during Winter Storm Elliott. The airline rapidly expanded its call center capabilities to manage the high volume of requests, keeping customers informed about extended waiting times and guiding them to various other communication channels for assistance.
2. Refunds and Reimbursements: Southwest allocated over $600 million for ticket refunds, reimbursements, and goodwill gestures during and after the storm. The airline processed these requests expediently, mostly within the seven-day period mandated by the DOT. A microsite was also launched to facilitate refund requests. Southwest ensured that customers could rebook without extra costs and approved reasonable reimbursement claims for additional expenses. As a goodwill measure, customers impacted by cancellations or significant delays received 25,000 Rapid Rewards points.
3. Flight Status Updates: Efforts were made to provide timely flight status updates to customers through various channels. Despite some delays in Automated Outbound Messaging (AOM) due to the high volume of messages, most passengers received timely notifications. Southwest worked on enhancing its communication tools and phone system capacity following the incident to better manage future high-volume situations.

Post-disruption, Southwest has implemented several measures to improve customer care and operational resilience. This includes the completion of its Disruption Action Plan and consistent operational performances during peak travel times in 2023.

Southwest has also embarked on a journey to transform the customer experience, introducing innovations such as digital baggage tracking, non-expiring flight credits, enhanced digital self-service options, and proactive customer notifications during weather events.

As part of today’s declaration, Southwest introduces a groundbreaking policy, effective by April 30, 2024, offering additional compensation for controllable cancellations and delays. This policy, a testament to Southwest’s commitment to leading customer service, offers vouchers worth $75 or more for significant delays.

Bob Jordan, President & CEO of Southwest Airlines, emphasized the airline’s focus over the past year on enhancing customer experience through strategic investments and initiatives, strengthening operational resilience and winter preparedness. He highlighted Southwest’s longstanding commitment to customer service, a key factor in its success and reputation.

Southwest’s resilience and dedication, especially during and after Winter Storm Elliott, are a testament to its 52-year legacy of operational reliability, exceptional customer service, and renowned hospitality. These principles continue to guide the airline’s journey forward.

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