Southwest Airlines Disruptions and Airline Consumer Protection Rules

Southwest Airlines Disruptions and Airline Consumer Protection Rules

INSIGHTi

Southwest Airlines Disruptions and Airline
Consumer Protection Rules
January 11, 2023
Southwest Airlines’ extensive flight cancellations and significant delays over the December 2022 holiday
period disrupted holiday travel and stranded numerous passengers, many of whom had to find alternative
ways to reach their destinations. On December 29, 2022, Transportation Secretary Pete Buttigieg sent a
letter to Southwest Airlines urging the carrier to prioritize its customer service responsibilities, such as
getting passengers to their destinations; providing meals, hotel rooms, and ground transportation;
fulfilling refund obligations; and reuniting passengers with their luggage.
Southwest’s meltdown, initially caused by winter storms, was compounded by an internal breakdown of
its crew-scheduling system. The airline disclosed in its regulatory filing on January 6, 2023, that it had
cancelled more than 16,700 flights from December 21 through December 31 and was expecting
significant negative impact to its fourth quarter financial performance. The severe disruptions and
passenger frustration has drawn attention to existing federal aviation consumer protection rules.
The rights of domestic airline passengers are set forth at three different levels: in federal statute, in
regulation, and in the airlines’ own policies known as “contract of carriage.”
The 1978 deregulation of the airline industry in the United States eliminated federal control over many
airline business practices, including pricing and domestic route selection. However, the federal
government continues to legislate and enforce certain consumer protections for airline passengers. The
House Committee on Transportation and Infrastructure and the Senate Committee on Commerce, Science,
and Transportation are the primary congressional committees of jurisdiction over airline passenger rights.
Congress can authorize the U.S. Department of Transportation (DOT) to establish and enforce rules on
certain issues, and it can enact requirements for airlines through direct legislation. In specific cases, DOT
can take enforcement actions against air carriers that violate consumer protection rules.
Most of DOT’s consumer protection rules are authorized by 49 U.S.C. §41712, which directs the agency
to “protect consumers from unfair or deceptive practices.” Some are also empowered by DOT’s authority
to require air carriers in interstate transportation to provide “safe and adequate service” (49 U.S.C.
§41702). The definition and interpretation of “unfair or deceptive” can significantly affect the scope of
DOT rulemaking and enforcement authority.
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DOT’s current aviation consumer protection rules (14 C.F.R. Part 259 Enhanced Protections for Airline
Passengers) represent the agency’s longstanding position with respect to compensation for flight
cancellations:
 Airlines have an obligation to provide a full refund when the carrier cancels or
significantly changes a passenger’s flight and the passenger chooses not to accept an
alternative (such as being rebooked on another flight) if it is offered by the carrier. In this
case, a full refund is due, along with any optional service fees already paid—such as for
baggage—regardless of whether the purchased ticket is refundable or not.
 When a passenger cancels a flight, that person is entitled to a refund for a refundable
ticket. Customers who purchase nonrefundable tickets are not entitled to a refund unless
the airline promises otherwise.
In August 2022, DOT issued a notice of proposed rulemaking (DOT-OST-2022-0089) on airline ticket
refunds aiming mostly to address airline ticket refund issues associated with flight changes and
cancellations related to the Coronavirus Disease 2019 (COVID-19). Specifically, DOT added the
definitions of “cancelled flight” and “significant change” to the proposed regulations to codify that it is an
unfair business practice to refuse to provide timely refunds when a carrier has cancelled or made a
significant change to a scheduled flight and consumers found the alternative transportation offered, if any,
to be unacceptable. The proposed rules also included a requirement that non-expiring travel vouchers or
credits be provided to consumers holding nonrefundable tickets for scheduled flights who are unable to
travel in certain circumstances related to a serious communicable disease.
There are no federal laws requiring airlines to provide passengers with monetary or other forms of
compensation when their flights are delayed; nor are airlines required to reimburse customers for
incidental expenses, such as a rental car, hotel room, or meal, due to a significantly delayed or cancelled
flight. These decisions are up to individual airlines, and each airline has its own policies about what it will
do for delayed passengers.
In November 2022, the chair of the Senate Committee on Commerce, Science, and Transportation and
two other committee members filed a comment on the aforementioned DOT proposed refund rule. The
lawmakers urged DOT to strengthen and expeditiously finalize the proposed rule to ensure that consumers
are compensated fairly when airlines cancel or significantly delay their flights—including secondary costs
incurred from hotels, meals, and transportation in the event of a cancellation or significant delay due to a
problem within the airline’s control. The committee announced on January 4, 2023, that it intends to hold
hearings on the Southwest flight cancellations.
On January 5, 2023, House Transportation & Infrastructure Committee ranking member Rick Larsen and
25 committee members sent a letter to the Transportation Secretary expressing their concern and urging
DOT to exercise its consumer protection authorities to hold airlines accountable and to issue rules and
standards that could limit or prevent future disruptions.
Although it is yet to be determined whether DOT will adopt new measures in its proposed rule on airline
ticket refunds, lawmakers may wish to consider potential options for consumer protection provisions as
they work on reauthorization of the Federal Aviation Administration (FAA). The current authorization is
set to expire on September 30, 2023.

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Author Information

Rachel Y. Tang

Analyst in Transportation and Industry

Disclaimer
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