Southwest Airlines has begun offering $75 vouchers to passengers whose flights are cancelled or delayed by more than three hours.
Customers will only be eligible for the vouchers if the delay or cancellation in question occurs within a week of the scheduled departure and can be put down to something the airline has control over, such as staffing or maintenance.
“Unacceptable” service levels
The move effectively comes under duress from the US Department of Transportation, which forced the compensation package through as part of a response to the airline’s catastrophic scheduling failings in the wake of winter storms in 2022.
In December of that year, Southwest cancelled over two thirds of its schedule over the course of 48 hours and, comparing unfavourably to how other carriers coped with the aftermath of the extreme weather event, two million of its passengers were left without flights – a degree of impact described by the Department of Transportation as “unacceptable”.
Now, according to a three-year mandate finally agreed with the Department in December 2023, Southwest has launched its voucher scheme, using $90 million of a $140 million penalty to compensate passengers when flights are affected due to problems that are the airline’s fault.
Can Southwest afford it?
Amid delayed deliveries from Boeing which mean Southwest is having to plan for less than half the added capacity it was expecting, and having stretched itself with customer service and tech updates last year, Southwest is struggling. First quarter revenues for 2024, show a net loss of $231 million.
Though the airline has already taken steps to cut costs, including slashing 2000 jobs and withdrawing from three US airports and one in Mexico, and the cost of the voucher scheme will be factored into financial planning, it remains to be seen if shareholders keep the faith with the carrier.
Airlines “on notice”
Expressing no qualms about the airline’s bottom line, U.S. Transportation Secretary Pete Buttigieg hailed the settlement as “the right thing to do” at the time it was reached.
“If airlines fail their passengers, we will use the full extent of our authority to hold them accountable,” he said, adding, “Taking care of passengers is not just the right thing to do—it’s required, and this penalty should put all airlines on notice to take every step possible to ensure that a meltdown like this never happens again.”
Southwest meanwhile has issued press statements saying the airline is “now proud to offer a voucher upon request via an all-new digital process” and pointing towards the new voucher request form, available online.
