DOT Cancels Southwest’s Final Meltdown Payment, Citing $1B Investment

The U.S. Transportation Department (DOT) has canceled the final installment of a civil penalty owed by Southwest Airlines for its winter 2022 operational disruption.

Announced in December 2023, the $140 million fine was levied by the agency under the Biden administration, with $72 million offset for mandatory vouchers and $33 million credited for customer compensation that went “above and beyond existing requirements.” Ordered to pay the remaining $35 million in three installments, Southwest made two $12 million payments to the U.S. Treasury in February 2024 and January 2025.

Now, “in lieu” of a final payment, DOT will credit the remaining $11 million back to the airline “for significantly improving its on-time performance and completion factor through its $112.4 million investment in its Network Operations Control (NOC),” it said in a Dec. 5 order. DOT described the approach as being in the public interest.

“It incentivizes airlines to invest in improving their operations and resiliency, which benefits consumers directly,” the agency wrote. “This credit structure allows for the benefits of the airline’s investment to be realized by the public, rather than resulting in a government monetary penalty.”

Southwest expressed gratitude to DOT for recognizing the “significant investments” it has made to modernize its operations since the meltdown, during which nearly 17,000 flights were canceled. Over the last two years the carrier has “successfully completed an operational turnaround that directly benefits our customers with industry leading on-time performance and percentage of completed flights without cancellations,” it said.

Southwest’s December 2022 operational disruption landed in the middle of the peak holiday travel period, as cascading, close-in flight cancellations during Winter Storm Elliot overwhelmed its processes and snowballed into a multi-day event. Afterwards, the airline implemented a multi-prong action plan—complementary to an existing operations modernization plan—investing in staffing, infrastructure, equipment, and technology to boost its resilience.

DOT imposed the fine following an investigation, stating that the carrier had failed to provide prompt or proper refunds, prompt flight status notifications, and adequate customer service assistance during the event. The civil penalty was 30 times larger than any previous DOT penalty for consumer protection violations, it said at the time.

Southwest has since invested over $1 billion in its operations to improve performance and reliability, DOT said in the new order, citing documentation provided to the department. The agency states, “Southwest has made major updates and improvements to its crew operations, ground operations, technical operations, customer service, and its [NOC], with the goal of improving on-time performance and increasing operational resiliency, especially during irregular operations.”