The Department of Transportation is fining Southwest Airlines up to $200,000 and sending a new message to airlines.
That message: Involuntarily bumped passengers have to be offered cash instead of just discounts on future tickets.
The message came through loud and clear yesterday as Southwest settled charges that it failed to properly notify bumped passengers last year they had an option to just take the cash and run.
The government has a clear procedure that has to be followed when passengers can't get on overbooked flights. Airlines can ask for volunteers to delay their plans, but once a passenger with a confirmed ticket is denied boarding, those procedures kick in.
Airlines have to offer the value of a ticket up to $400 for a passenger delayed 1 to 2 hours and double the value of the ticket, up to $800, for passengers delayed longer.
Southwest settled charges that it didn't always follow those procedures last year and passengers either weren't offered the cash or other steps weren't taken.
Southwest has to pay the Department of Transportation $90,000 immediately, but another $90,000 will be due only if Southwest doesn't start complying. Southwest will spend an additional $20,000 to better train its people.
The airline did not return a call seeking comment, but said that it told the DOT that its overall rate of compliance is high.
Bill Mosley, a DOT spokesman, said the Southwest fine stems from stepped-up enforcement by the department of consumer issues. A new three-hour tarmac delay issue takes effect on Thursday.
"It is part of a heightened enforcement stature in the department," he said. Last year the department fined Spirit Airlines for voluntary boarding compensation procedure problems.
Managing your Portfolio
Keeping your portfolio and financial life fit!View Course »