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The U.S. Transportation Department has waived an $11 million penalty previously imposed on Southwest Airlines, finalizing the airline’s $140 million settlement tied to its massive December 2022 holiday travel disruption. The meltdown stranded more than two million passengers and marked one of the most significant operational failures in recent airline history.
Southwest originally agreed in December 2023 to pay a $35 million cash fine and distribute $90 million in travel vouchers—valued at $75 or more—to travelers delayed at least three hours due to airline-related issues or cancellations. According to USDOT's latest order, waiving the remaining $11 million is justified because Southwest has invested over $1 billion in system upgrades and operational improvements since the crisis. The agency noted that encouraging airlines to make significant infrastructure and technology investments ultimately benefits consumers by improving reliability and resilience.
Southwest welcomed the decision, emphasizing that its recent operational overhaul has resulted in strong on-time performance and reduced cancellations across its network. The carrier said the improvements demonstrate a clear turnaround from the disruptions seen in 2022.
The waiver comes amid broader regulatory shifts under the Trump administration, which has moved to scale back several aviation consumer protection measures introduced during President Biden’s tenure. One example includes USDOT’s plan—later abandoned—to require airlines to provide cash compensation for flight disruptions caused by carriers. The department also dropped a lawsuit filed in the final days of the Biden administration accusing Southwest of operating chronically delayed flights. The airline had disputed the allegations, asserting that the delays stemmed from pandemic-era challenges and circumstances beyond its control.
The latest decision marks a significant moment for both regulators and Southwest as the airline continues rebuilding consumer trust while navigating a changing regulatory environment.
