During the holidays, more than a million passengers were affected by delays, cancellations, stranding, or all of the above. This ranks as the greatest airline operational breakdown in recent memory. And many deemed Southwest’s comeback insufficient.
But what are the rights of passengers? What are the rights of Southwest passengers? What is expected of the airline? And what will they do in practice? What will the United States Department of Transportation do?
Faced with the possibility of a hefty enforcement fee from the government, the airline has indicated publicly that it will compensate passengers for “reasonable” expenses. However, Southwest has failed to define “reasonable.” In some instances, the airline has compensated travelers for their misery with additional frequent flyer miles, which is scarcely acceptable considering that many Southwest passengers may only fly the airline twice a year, when it is impossible to redeem miles or points.
In addition, it does not reimburse individuals for their actual out-of-pocket expenses incurred while stranded, such as hotel accommodations, food, clothing, and toiletries — since so many baggage were also lost during this time — as well as the cost of pursuing alternate forms of transportation.
It is plausible to assume that the average cost to most stranded travelers is approximately $400, not including lost salaries and other missed income events or reservations, such as concert performances and hotel stays at their final destination. With over 1 million impacted passengers, the expected cost of refunds would exceed $40 million, and according to some estimates, this is a conservative estimate that might grow to around $70 million.
The airline will never regain the revenue it lost during the period it was effectively closed. The most recent estimates vary about $500 million. This quarter might signal a significant profit increase for an airline that has been reliably profitable for over 50 years.
While the federal government investigates Southwest’s conduct before and during the crash, the airline is preparing for a massive proposed penalties. Historically speaking, however, federal agencies’ proposed fines are nearly never paid in whole. They are negotiated down in price. For instance, a $25 million fine suggested by the Department of Transportation against Air Canada during the pandemic for failing to issue passenger refunds was reduced to less than $4 million through negotiation.
However, there is a considerable possibility that the agency would recommend a bill of rights for airline passengers. The Airline Deregulation Act of 1978 prohibits individual states from regulating airlines. Some state legislatures have passed and their governors have signed passenger rights legislation in the recent past, only to have it challenged by airlines using the Deregulation Act. In each instance, the airlines prevailed.
Similar to how the agency enacted and enforced the tarmac delay regulation a number of years ago when hundreds of passengers were left in freezing or scorching planes on the runway and not returned to the gates, the department could create and implement a passenger bill of rights. If an airline fails to return a plane to the gate within three hours after it has taken off and effectively stopped moving, the airline is subject to fines of up to $27,500 per passenger. This represents a seven-figure fine for a fully loaded 737. While the airlines challenged the rule and claimed it was unfair and impractical, the number of tarmac delay rule infractions has decreased to a few following the rule’s implementation.
A major lesson for travelers from the disaster is the need of having a backup plan. Those who can afford it can purchase a second, fully refundable ticket on a competitive carrier to ensure they have a seat if they are stuck by one airline. And if they do not require the whole fare ticket, they can request a refund, but not everyone can afford to do so.
The second lesson examines several kinds of transportation. Consider taking the train instead of a flight. Amtrak ridership is on the rise, and for trips of less than 450 miles, it becomes a logistically and economically viable alternative, regardless of the weather.
Lastly, if the airline that left you stranded is only willing to compensate you with frequent flyer miles or points, this is obviously insufficient to pay your losses or damages. You are not required to accept this offer. Keep all of your receipts, as well as the full names and titles of the airline employees with whom you communicated. Prepare to write the U.S. DOT office of consumer affairs a letter of complaint accompanied by all relevant documentation.
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