By Sophia Sahagun
I. Introduction
In December 2022, Southwest Airlines melted down. Almost 16,000 total canceled flights at the end of the month left travelers and employees stranded at airports all over the country.[1] Though at first inclement weather was blamed, later it became clear that this was a Southwest-specific problem about far more than just weather. In fact, of the 3,000 flights canceled on December 27, 2022, 85% of those were Southwest flights.[2] Southwest canceled 2,500 more flights on December 28th and 2,350 more on December 29th.[3] In total, two million people were affected.[4]
Beyond weather, Southwest’s several-day debacle was the result of a confluence of several factors, most importantly, outdated technology. Michael Santoro, Vice President of the Southwest Airlines Pilots Association, said that the storm was merely a catalyst, but that Southwest’s “internal software can’t handle massive cancellations. The company hasn’t invested the money into scheduling infrastructure to support the network they have developed.”[5] Southwest has since returned to normal operations, but the fallout from the incident was significant. Thousands of passengers who were stranded, lost luggage and missed holiday plans struggled to navigate an overwhelmed customer service system, delaying even preventing refunds and rebookings.[6]
Some passengers were forced to find alternative travel methods at the last second. One woman reported having no choice but to spend nearly $1000 on a rental car and drive 22 hours straight to get from Dallas to Los Angeles. Some stranded passengers were deprived of necessary medication, having not packed enough to last through a several days’ delay.[7] One woman even missed her own wedding, a destination wedding in Belize scheduled for December 30, 2022. Though her flight was refunded, many of her wedding plans could not be refunded or changed at the last minute.[8]
The crisis was so impactful that it drew the attention of the federal government. By January 4, 2023, U.S. Senator Maria Cantwell, Chair of the Senate Committee on Commerce, Science and Transportation, released a statement that the Committee will hold hearings in the wake of Southwest’s massive failure, both in operations and in customer service.[9] The purpose of the hearing was to evaluate testimony by involved witnesses and examine recommendations and corrective actions to improve airline operations nationwide.[10]
This paper will examine the legal ramifications of the crisis and predict the possible amendments to airline regulations. It is divided into three sections. First, I will discuss the federal regulations surrounding airline passenger protections, the extent to which Southwest did or did not comply with their contractual obligations to their customers, and how these regulations are enforced. Second, I will discuss the past, present and future of a major loophole that has helped airlines avoid liability. Third, I will discuss the hearings and the outcome of the hearings and provide predictions as to the types of changes that will likely be made.
II. Airline Passenger Protections – History and Recent Changes
In December 2009, the Department of Transportation issued a final rule, codified in the Code of Federal Regulations, requiring major air carriers to adopt specific plans for preventing, mitigating and preventing common passenger problems. This process began in 2007 as a response to rising outrage about an extended pattern of excessive delay and poor customer service.[11] For example, one major change made was officially categorizing continued delays on flights that are chronically late as part of an “unfair and deceptive business practice” in violation of 49 U.S.C. 41712.
This ruling has been expanded since to tighten these requirements and require more customer service accountability by airlines toward consumers. One introduced requirement was that each airline document a detailed customer service plan in compliance with standards outlined by federal statute.[12] Airlines must make this plan public and easily accessible via their website.[13]
Further, airlines are required by this statute to make it easy for consumers to file complaints and to guarantee that they will receive confirmation of complaint receipts and responses in a timely manner.[14] Consumer problems such as excessive delays, ticket and fee refunds (such as for optional services the passenger was unable to use), lost baggage and cancellations must also be processed promptly. These customer service plans are required by statute to be self-audited on a regular basis, and documents describing these audits must be provided to Department of Transportation officials upon request.
Whether or not Southwest breached its customer service plan will be determined by the Department of Transportation after the investigation is completed. The plan guarantees that customers will be notified of a change in flight status, such as a delay or cancellation, within thirty minutes of Southwest becoming aware of that change. Under this change, Southwest will receive notice of a general flaw in its system that could lead to major difficulties and delays could constitute failure to notify customers within thirty minutes of it being made aware.[15]
Further, airlines are barred by federal statute from committing unfair and deceptive business practices.[16] This statute is broadly defined, allowing the Department of Transportation to investigate possible unfair business practices by airlines and make a determination after a hearing.[17] This is vague, however – the only guaranteed “unfair and deceptive” business practice is an excessively lengthy tarmac delay. However, in 2020-2021, the department of Transportation laid out a set of guidelines in evaluating and interpreting unfair and deceptive practices.
A practice is unfair and deceptive to consumers if it causes substantial, not reasonably unavoidable harm to consumers that is not outweighed by benefits to consumers and if it is likely to mislead a reasonable consumer acting under the circumstances. Intent is not necessary to establish a prima facie showing of unfair, deceptive practice under the statute.[18] If Southwest knew (or reasonably should have known) that its flight schedule for December 2022 was untenable, and proceeded with it anyway, Southwest would likely be considered participating in an unfair and deceptive business practice.[19] This is especially likely here where there were too many flights, too few crewmembers and a management system unfit to handle the demands of the schedule. Indeed, union officials reported that they had warned Southwest in the past about these issues, which makes it very likely that the problem was perceptible.[20]
Though these regulations were a major step forward in ensuring consumer transparency and airline accountability, enforcement is challenging. Because the rules are written as a bill of rights that airlines are supposed to enforce themselves, the federal government can do little more in the short term than “harshly worded social media callout[s]” in the event of a major disaster.[21] Notably, compliance with customer service plans is not a requirement for airlines to keep their licenses to operate.[22] Moreover, most of the rules are written around preventing lengthy tarmac delays, but not necessarily canceled flights, which were the primary source of consumer distress in December 2022. Lengthy tarmac delays can trigger heavy fines for airlines, but cancellations may not necessarily receive the same treatment in terms of fines.[23]
These widely publicized problems for Southwest gave rise to an investigation and to a Senate hearing, held in early February 2023.[24] Pete Buttigieg, Secretary of Transportation, issued a warning that Southwest would “face penalty” for failure to adequately reimburse passengers.[25] The Department of Transportation ultimately announced that knowingly scheduling too many flights would be considered an unfair and deceptive practice, and that they plan to hold the airline accountable.[26]
III. Weather as an Excuse
Flight delays and cancellations often result in myriad of unexpected costs for consumers, such as lodging, car rental, new flight tickets and more. For this reason, like most airlines, Southwest makes an important distinction between services they offer in the event of significant changes that are within its control, versus services in the event of changes outside of its control. Reasons within its control, such as mechanical problems and aircraft swaps, will result in meal vouchers and sometimes even lodging and transportation accommodations for inconvenienced customers.[27]
However, problems caused by events outside of its control such as weather, air traffic control, safety/security related events, infrastructure/utility problems and FAA-required crew duty limitations, will result only in a rebooking via Southwest or a refund of the unused portion of the customer’s ticket. Notably, within this December 2022 crisis, two million Southwest customers received hundreds in travel credits and refunds for canceled flights. Southwest processed more than 96% of eligible requests for lodging and transport reimbursement as of February 9, 2023. The total number of eligible requests was 284,188, less than 15% of the total two million affected customers. Though Southwest did not provide details about ineligible requests, one wonders if legitimate requests were deemed ineligible for perhaps dishonest reasons such as weather.[28] On the other hand, Southwest Chief Operations Officer Andrew Watterson did offer testimony to the senate that all flight disruptions between December 24th and January 2nd were treated as “within the airline’s control.”[29]
There are clear incentives to attribute major problems such as cancellations or delays to events outside of an airline’s control. In December 2022, Southwest initially blamed bad weather. However, stranded passengers and major media doubted this, given that other airlines’ operations were operating normally and recovered far quicker from the same weather conditions.[30] One possible result of this debacle will be a tightening on the types of excuses an airline can make for providing poor service or no service at all, and an added requirement of more evidence from airlines regarding what is or isn’t within their control.
IV. The February 9th Hearing
On February 9, 2023, a hearing titled “Strengthening Airline Operations and Consumer Protections” was held by the Senate Committee on Commerce, Science and Transportation, led by Chair Maria Cantwell, a Senator from Washington. The Committee was poised to hear testimony from a panel of witnesses to evaluate recommendations and determine appropriate changes and corrective actions to improve airline consumer protections at the federal level.[31] Among the witnesses were Southwest Airlines Chief Operating Officer Andrew Watterson, President of the Southwest Pilot’s Association Casey Murray, research directors at nonprofits, and others.[32]
The five witnesses provided testimony and were also asked to answer questions by the senators on the committee, especially COO Watterson. Frustration toward the airline was bipartisan, with both Senators Ted Cruz (R-TX) and Maria Cantwell (D-WA) emphasizing Southwest’s “epic screw up” and “the public’s frustration.”[33] Watterson admitted that the airline had “messed up” and apologized.[34]
Possible suggestions for improvement at Southwest and within federal regulations governing airlines were offered by the panelists. Watterson committed to a list of “pro-consumer actions” that would constitute primarily technological changes to the airline’s internal infrastructure. Dr. Clifford Winston of the Brookings Institution offered a broader approach in his testimony, recommending deregulation of major aspects of the industry, such as the privatization of air traffic control.[35]
On the other hand. Paul Hudson, President of passenger advocacy organization Flyers Rights, recommended an opposite approach, in the form of a return to pre-1978 regulations on the industry.[36] Airlines for America head Sharon Pinkerton disagreed with this, stating that “[w]e should be moving forward, not backward to the early 1970s.”[37] Instead, she recommended a deepened focus on Federal Aviation Administration (FAA) Reauthorization and on technology, workforce and supply modernization, as well as new accountability measures. FAA Reauthorization is the process by which the FAA is able to reorganize its funding, spending and policy goals. It is passed in the form of a Congressional Act, most recently in 2018, and is set to expire this year. Congress’s plan for a 2023 Reauthorization includes heightened consumer protections and regulation of avoidable problems that adversely affect passengers.[38]
Murray, with unique insight as head of the Pilots’ Association for the airline, called for the end of “Drift Normalization,” a term he uses to mean harmful, negligent behavior by management. He testified that “[w]arning signs were ignored. Poor performance was condoned. Excuses were made. Processes atrophied. Core values were forgotten.”[39] He ultimately recommended holding Southwest accountable by requiring the airline to provide a timeline for when internal management technology will be improved, as well as an accounting plan for how its planned $1B investment in new technology will be spent.
The Senate will consider all five statements in its evaluation of possible solutions moving forward, which will likely appear in the FAA Reauthorization of 2023 after the end of the federal fiscal year on September 30th.[40] A drastic return to pre 1978 U.S. law seems unlikely, but increased airline accountability and consumer protections have been the trend for over a decade within the Department of Transportation.
V. Consumer Reputation
Beyond legal implications, Southwest Airlines faces a complex set of repercussions among consumers, which will alter its reputation among consumers and which may in turn influence the value of its stock. In other words, Southwest must answer to its customers, past, present and future, for these problems, or face a dramatic crash in stock prices. Southwest owes a fiduciary duty to its shareholders to prevent this from occurring.[41]
One avenue by which Southwest may accomplish this is by clearly expressing a plan to the public for improvement of its systems to prevent this from ever occurring again.[42] This plan announcement may be disseminated in a place that allows for simple, open engagement by consumers, such as on social media websites like Twitter.
Another avenue is by reassuring its internal employees that the company is doing all that it can to improve operations, for employees and customers. By improving employee experience, individuals who were once disgruntled and dissatisfied with operations can now become advocates and can help change the tide of public opinion. With unique internal insight about changes being made in real time, they can help spread the word that Southwest means what it says and is taking steps to improve its services for all.
VI. Conclusion
Airlines receive bailouts during major social events and consumers rely on the federal government to hold airlines accountable for misconduct. Thus, the airline industry and the federal government are deeply intertwined. While experts disagree about further regulation or deregulation, pressures on airlines to be accountable to their customers with honesty about disruptions and continually modernized technology appear to be a good place to start. Congress will consider the 2023 Federal Aviation Reauthorization Act this year, which stands to heighten consumer protections and increase federal oversight of possible future meltdowns.
[1] Noah Barsky, Southwest Airlines Crisis Exposes 3 Reasons Why Great Companies Stumble, Forbes, Jan 6, 2023.
[2] Grace Toohey, Margot Roosevelt & Alexandra E. Petri, Far from a Shock, Southwest Meltdown Was ‘perfect storm’ of Well-Known Vulnerabilities, Los Angeles Times, Dec. 28, 2022.
[3] Alexandra E. Petri & Grace Toohey, Southwest struggles to recover from historic meltdown as thousands remain stranded, Los Angeles Times, Dec. 28, 2022.
[4] Niraj Chokshi, Southwest Airlines Faces Tough Questions From Senators, New York Times, Feb. 9, 2023.
[5] Grace Toohey et. al., supra note 2.
[6] Id.
[7] Nathan Solis, Andrew J. Campa, Jessica Garrison, Alexandra E. Petri, Canceled. Canceled. Canceled. Southwest meltdown brings holiday misery to airports, Los Angeles Times, Dec. 27, 2022.
[8] Nathan Solis, ‘It was horrible’: Stranded Southwest Passengers Still Waiting to Recoup Costs From Airline Meltdown, Los Angeles Times, Jan. 11, 2023.
[9] Press Release, Maria Cantwell, Chair of the Senate Committee On Commerce, Science and Transportation, Committee to Hold Hearings in Wake of Southwest Airlines Operational, Customer Service Meltdown, Cantwell Says, (Jan. 4, 2023) https://www.commerce.senate.gov/2023/1/committee-to-hold-hearings-in-wake-of-southwest-airlines-operational-customer-service-meltdown-cantwell-says.
[10] Hearing, U.S. Senate Committee on Commerce, Science, and Transportation, Executive Session & Hearing: Strengthening Airline Operations and Consumer Protections, (Feb. 9, 2023) https://www.commerce.senate.gov/2023/2/executive-session.
[11] Enhancing Airline Passenger Protections, National Archives Federal Register, (Dec. 30, 2009) https://www.federalregister.gov/documents/2009/12/30/E9-30615/enhancing-airline-passenger-protections.
[12] 14 C.F.R. § 259.5 (2011).
[13] 14 C.F.R. § 259.6 (2011).
[14] 14 C.F.R. § 259.7 (2011).
[15] Southwest Airlines Customer Service Plan—English Version, Southwest Airlines, Aug. 30, 2022, https://www.southwest.com/assets/pdfs/corporate-commitments/customer-service-plan.pdf?clk=7396032.
[16] 49 U.S.C § 41721 (2000).
[17] Id.
[18] 14 C.F.R. § 399.79(b) (2021).
[19] Donald Wood, Southwest Airlines Being Investigated for ‘Unfair and Deceptive Practice’, Travel Pulse, Jan. 26, 2023.
[20] Id.
[21] Karen Brooks Harper, Southwest Airlines’ Holiday Meltdown Brings on Federal Investigation, Texas Tribune, Dec. 27, 2022.
[22] Id.
[23] Id.
[24] Nicholas Reimann, Southwest Airlines Under Federal Investigation For Possible ‘Deceptive’ Scheduling, Forbes, Jan. 26, 2023.
[25] Id.
[26] David Koenig, U.S. investigates Southwest Airlines’ December flight cancellations, Los Angeles Times, Jan. 25, 2023.
[27] Id. Supra note 15.
[28] Niraj Chokshi, supra note 4.
[29] Testimony of Andrew Watterson, Chief Operating Officer, Southwest Airlines Co., Hearing Before the U.S. Senate Committee on Commerce, Science, and Transportation, “Strengthening Airline Operations and Consumer Protection”, (Feb. 9, 2023) https://www.commerce.senate.gov/services/files/AA8C8107-7E17-43BB-80EA-42D8AA9C4E60.
[30] Samantha Masunaga, Katie Licari & Vanessa Martinez, Making Travel Plans? Southwest’s Holiday Meltdown May Be a Sign of Air Travel Drama to Come, Los Angeles Times, Jan. 26, 2023.
[31] Id., supra note 9.
[32] Id.
[33] Niraj Chokshi, supra note 4.
[34] Id.
[35] Statement of Clifford Winston, The Brookings Institution Economic Studies Program Senior Fellow, Hearing Before the U.S. Senate Committee on Commerce, Science, and Transportation, “Strengthening Airline Operations and Consumer Protection”, (Feb. 9, 2023) https://www.commerce.senate.gov/services/files/44952D94-56B4-4432-BE6B-A3632C8FA334.
[36] Testimony of Paul Hudson, President, Flyers Rights Organization, Hearing Before the U.S. Senate Committee on Commerce, Science, and Transportation, “Strengthening Airline Operations and Consumer Protection”, (Feb. 9, 2023) https://www.commerce.senate.gov/services/files/9346C53E-F202-48E7-8765-10D34CE0DB4E.
[37] Statement of Sharon Pinkerton, Senior Vice President, Airlines for America Legislative and Regulatory Affairs, Hearing Before the U.S. Senate Committee on Commerce, Science, and Transportation, “Strengthening Airline Operations and Consumer Protection”, (Feb. 9, 2023) https://www.commerce.senate.gov/services/files/BF66F413-07BE-4144-B5E6-4FCA6B3C4BD3.
[38] Alan Darby, The FAA Reauthorization Act of 2023: What it is and Why it Matters, Consumer Federation of America Blog, Mar. 13, 2023.
[39] Written Testimony of Captain Casey Murray, President, Southwest Airlines Pilots Association
(SWAPA), Hearing Before the U.S. Senate Committee on Commerce, Science, and Transportation, “Strengthening Airline Operations and Consumer Protection”, (Feb. 9, 2023) https://www.commerce.senate.gov/services/files/B8D729EC-5F96-4E8D-A902-F43DA29F2E08.
[40] Jonathan Hammond, A Fright for Sore Flie(r)s: Senators Tackle Consumer Protection in Latest Hearing, Eno Center for Transportation, Mar. 24, 2023.
[41] See Marc S. Gerber, Edward B. Micheletti, Peter A. Atkins, Social Responsibility and Enlightened Shareholder Primacy: Views From the Courtroom and Boardroom, Skadden, Arps, Slate, Meagher & Flom LLP Insights, Feb. 4, 2019.
[42] Phil Britt, What Can Southwest Airlines Do to Restore Customer Trust?, CMS Wire, Feb. 1, 2023.
