Southwest Airlines’ $140 million settlement: Will customers get any money?

The settlement includes a $140 million civil penalty, the largest ever imposed on an airline, the department said. That’s on top of hundreds of millions of dollars that Southwest has already paid out to affected customers.

“It will never happen again,” Southwest CEO Bob Jordan said last week. “I promise you that.”

Most of the settlement will go toward customer compensation — but don’t expect a lump payment if you already received a refund or flight miles for last December’s debacle.

Here’s a breakdown of what the settlement means for Southwest travelers past and future.

My flight was canceled in 2022. Will I get any more money?

Customers impacted by last winter’s cancellations should not expect to receive additional compensation following the settlement if they have already requested and received a refund, reimbursement or travel credit, Southwest told MarketWatch via email.

According to the DOT, the airline has already paid out more than $600 million to customers impacted by last year’s meltdown. That included flight refunds, meal and accommodation reimbursements and flight miles: Southwest provided 25,000 points in the airline’s Rapid Rewards frequent-flyer program to each traveler impacted.

The Rapid Rewards points that Southwest has already given out to affected passengers will count as a $33 million credit toward the $140 million settlement. Of the $140 million total, $35 million will be paid directly to the federal government. Southwest will also receive a $72 million offset toward the penalty for a new flight-voucher compensation system.

How will future Southwest customers be impacted?

Future flyers on Southwest could see a benefit as a result of the settlement.

The DOT required the airline to set aside $90 million in flight vouchers to compensate passengers impacted by future delays or cancellations — an incentive to prevent similar widespread travel snags going forward.

If Southwest causes a passenger to arrive at their destination three or more hours later than their original arrival time due to an issue within the airline’s control, the airline must provide that passenger with a transferable flight voucher worth at least $75, the DOT said.

That’s a step further than the policy outlined in the airline’s current customer-service plan, which states that travelers subject to those delays are provided with a meal voucher.

The flight vouchers required by the DOT are a relatively generous reimbursement to offer all travelers, said David Slotnick, a senior aviation-business reporter for travel site The Points Guy.

“The idea of it being standardized and mandated certainly makes it generous,” he said. “As far as I can tell, this hasn’t been done before. It’s sort of a precedent-setting move.”

How can I make sure I get refunded for canceled flights on any airline, not just Southwest?

About 7.5 million Americans are planning to take to the skies during the 10-day period from Dec. 23 to Jan. 1 — the busiest holiday season for air travel on record, according to AAA. 

In the U.S., consumers are entitled to a refund when an airline completely cancels a flight. Beyond that, refund and reimbursement policies vary by airline.

Before you start your trip, it’s a good idea to make sure you have a basic understanding of your airline’s refund and reimbursement policy, so there are no unpleasant surprises if there’s a delay, cancellation or other unexpected change in your travel plans, Slotnick said. The DOT has a dashboard that compares the customer-service policies of different airlines. 

“If your flight is delayed because of weather or a mechanical issue or something within the airline’s control, really the best thing to do is just go onto that website, find your airline and see what you’re entitled to,” he said. “Then take it from there.”

Consumer advocates also recommend downloading your airline’s app, which can sometimes help you get real-time updates on flight status and communicate faster with customer service, “especially if you need to rebook your flight and the phone lines are jammed,” U.S. Public Interest Research Group, a consumer watchdog organization, said in a recent report about complaints against U.S. airlines.

If you believe your airline isn’t honoring its own policies or regulatory requirements, you can file a complaint with the DOT. This year, passengers are on track to file a record number of complaints about U.S. airlines, many of them about canceled flights.

Passengers craving additional peace of mind could opt for travel insurance, which can help cover the costs of a delayed, canceled or missed flight, Slotnick said. Some credit cards have built-in travel insurance, too — so check the benefits on the card you used to book your flight.

Those worried about a repeat of last year’s mishaps may find comfort in the fact that airlines also want to make sure you get to your destination, Slotnick said.

“There’s no incentive for airlines to cancel a flight. They lose money every time they do,” he said. “There’s a mutual interest in keeping operations working on time.”