US Government Waives Final Portion of Biden-Era Fine Against Southwest Airlines

The US Department of Transportation (DOT) has waived the final portion of a multimillion-dollar penalty issued to Southwest Airlines over its 2022 holiday-season operational collapse, citing significant improvements in the carrier’s on-time performance and network resilience.

The decision reduces Southwest’s financial obligation under a $140 million civil penalty announced in 2023, the largest consumer-protection fine ever imposed on a US airline. The penalty followed the carrier’s mass cancellations during a winter storm that crippled operations in Denver and Chicago before spreading system-wide.

Under the settlement, most of the fine was directed toward traveller compensation. Southwest also agreed to pay $35 million to the US Treasury, split into three instalments. The airline paid $12 million in 2024 and another $12 million earlier this year.

DOT said Friday that it will waive the final $11 million payment, which had been due on January 31, 2026.

DOT: Improvements justify the waiver

In its order, the department said Southwest had made notable progress in strengthening its operational reliability.

“DOT believes that this approach is in the public interest as it incentivises airlines to invest in improving their operations and resiliency, which benefits consumers directly,” the agency said, adding that enhanced performance offers more value to the public than a monetary penalty.

A meltdown that stranded millions

The waived fine stems from the December 2022 storm that overwhelmed Southwest’s crew-rescheduling systems and forced the cancellation of 17,000 flights, stranding more than 2 million travellers.
The Biden administration concluded the airline violated consumer-protection laws by failing to adequately assist passengers who were left searching for alternative flights and hotel accommodations. Many callers to Southwest’s customer-service centre encountered long delays or could not get through at all.

Even before the federal penalty was finalised, Southwest estimated the meltdown cost more than $1.1 billion in refunds, reimbursements, added expenses, and lost ticket sales.