By Skylar Woodhouse and Mary Schlangenstein
The US Department of Transportation fined Southwest Airlines $140-million (about R2.5-billion) for violating consumer protection laws, nearly a year after a late December meltdown of its operations during a storm stranded more than 2 million passengers.
The DOT said the penalty is 30 times larger than any other consumer protection violation fine it's issued.
Most of the money will be used as compensation toward Southwest passengers with cancelled flights or significant delays in the future, according to the DOT.
"Today's action sets a new precedent and sends a clear message: if airlines fail their passengers, we will use the full extent of our authority to hold them accountable," Transportation Secretary Pete Buttigieg said in a statement.
Through a DOT investigation, the agency said it found the company failed to provide appropriate customer service, issue prompt flight status notifications and provide refunds in a proper manner.
The agency also said it's closing its investigation into how Southwest schedules flights without a conclusion in order to "obtain quick relief for the public."
Southwest Airlines said in a statement that it's "grateful" to have reached a "consumer-friendly settlement."
The airline touted changes to its compensation policy which will provide a $75 or more voucher for passengers who experience controllable cancellations and lengthy delays starting in April 2024.
Last December, Southwest scrapped more than 16,700 flights over 10 days, after a winter storm snarled flights, leaving crew members and planes scattered across 50 airports.
The disruptions overwhelmed the airline's outmoded crew scheduling system, forcing it to cancel most flights to re-set its network.
In January, the US Department of Transportation launched a "rigorous and comprehensive investigation" of Southwest's operational meltdown during the holidays last year.
The agency was examining whether Southwest executives allowed "unrealistic scheduling of flights," which is considered an unfair and deceptive practice under federal law.