Southwest Gives Out 270,000 Refunds as Executives Blamed Over Holiday Meltdown

Quizzed on Capitol Hill, Southwest Airlines executives blamed worse-than-expected weather and outdated IT systems for its December fiasco and said it had approved 96% of compensation requests emanating from the disruption.

The carrier has already reimbursed 273,406 affected travelers, with all well-documented claims under $4,000 “approved on the spot,” said chief operating officer Andrew Watterson.

While airlines legally must refund customers for canceled flights and cover some of their resulting expenses, Southwest said it had gone above and beyond by covering the accommodation, meals, rental cars, and other expenses for stranded travelers.

“We reimbursed tire chains, strollers, car seats, pet sitting, but things we didn’t reimburse were things like $7,000 shopping sprees at luxury stores or chartering a private jet,” Watterson told reporters on Thursday, ahead of a Senate hearing over the chaos. A supervisor reviewed claims for more than $4,000, he added.

Photo: Courtesy of Southwest Airlines

Southwest previously said it would accept any “reasonable requests” for compensation from the hundreds of thousands of customers inconvenienced by its wave of cancellations and delays between December 24 and January 2. It has also offered impacted travelers $300 worth of frequent flyer points and sent emailed apologies.

During the hearing, Watterson told senators that the airline has also returned nearly all luggage to the passengers, almost six weeks after photos emerged of hundreds of suitcases flooding baggage claim areas in airports.

“We’ve returned every single bag, except there are 200 that we still have with no markings or identifying information that we’re holding,” he said. “And we will continue to hold those until we can find someone who owns it.”

While other airlines were initially also wounded by the pre-Christmas blizzard, Southwest struggled to recover and was still axing flights a week after the weather had calmed. The airline ultimately canceled around 16,700 flights and delayed thousands more, impacting around two million flyers. Hundreds of Southwest employees were also stranded during the chaos.

Photo: Courtesy of Southwest Airlines

The government is now investigating the causes of the chaos, with a probe announced by the Department of Transportation and hearings being held by the Senate Commerce Committee. Watterson appeared before the committee on Thursday and said the airline was conducting its internal review into the breakdown.

In prepared remarks, he also revealed new details of the airline’s internal collapse as the weather descended. Airline officials had underestimated the storm’s ferocity, described as a bomb cyclone.

Amid high winds and blizzard conditions, Southwest canceled almost its entire schedule at Denver Internation (DEN) and Chicago O’Hare (ORD) airports for several consecutive days. A quarter of Southwest crews begin and end their journeys at those two airports, so cancellations there led to staff shortages throughout the rest of the network.

These shortages were compounded by outdated scheduling software, which couldn’t match crews with understaffed flights, leading to more cancellations. Communication between Southwest operations centers also broke down, causing “compounding, frequent, close-in flight cancellations,” Watterson said, many of which were announced to travelers already at the airports.

The company eventually decided to “pre-cancel” two-thirds of its schedule between December 27 and 28 to reset operations.

Photo: Southwest Airlines employees maintain operations through COVID-19. Courtesy of Southwest Airlines / Stephen M. Keller

“The root cause was how we handled our winter operations, and that’s where you will see us put some focus over a multiyear period because that’s what started the dominoes falling and the last domino was the crew scheduling system,” Watterson said.

Southwest will dedicate itself to upgrading those systems and has budgeted $1.3 billion for investments, upgrades, and IT systems maintenance plans in 2023.

Watterson said some improvements are already in the works, including upgrades to electronic communication systems between crews and crew scheduling teams. The airline has also reinforced the ranks of its operational staff so that crew recovery efforts can begin “at the first sign of a potential backlog.”

More flights are also on the schedule for 2023, so Southwest can more easily rebook passengers when flights are disrupted.

The airline is also seeking outside advice and has hired Oliver Wyman management consultants to deliver recommendations on improving performance during bad weather.

Watterson expressed remorse for the chaos, which interrupted the holiday plans of thousands of passengers and staff. “We’ve been mindful that an apology alone, no matter how heartfelt or how often stated, would not suffice,” he said.

Snow at Dallas (Love Field) | Photographer: Stephen M. Keller

But Casey Murray, president of the Southwest Airlines Pilots Association, told senators that the carrier had ignored previous warnings from the union about crew scheduling problems.

He said the scheduling system broke down during a similar crisis in October 2021, but Southwest failed to improve. So instead, it focused on growth, adding 18 new destinations during the pandemic.

“Managers’ overconfidence in their planning and a systemic failure to provide modern tools to employees doomed SWA’s recovery before the first snowflake hit the ground,” he said.

Amidst the meltdown, he revealed that the airline operated 500 empty flights while thousands of passengers were stranded.

Murray urged Congress to require Southwest to give more details about its promise to invest more in technology, including a deadline for fixing its crew scheduling system.

“We know this won’t be the last snowstorm to hit this country. So let’s figure why Southwest’s operations collapsed and what needs to change so this never happens again on Southwest or any other airline,” said committee chair Maria Cantwell, Democrat Senator for Washington.

Meanwhile, the Department of Transportation’s investigation will consider whether Southwest bosses deliberately scheduled more flights than the airline could feasibly operate during Christmas, a violation of federal laws against “unfair and deceptive” commercial practices.