US Congressional leaders are beginning to push for stronger consumer protections as a result of Southwest Airlines’ significant operational failures over the holiday period.
Texan low-cost carrier Southwest Airlines pencilled in fourth quarter losses of up to US$825 million in pre-tax income following its disastrous meltdown which resulted in the cancellation of 16,700 flights over Christmas and New Year.
The losses which included a US$425 million bill for lost revenue and costs in reimbursing people for alternative travel will likely generate a net loss for the final quarter of 2022, completely reversing earlier forecasts of strong profits and margins.
Southwest said it also expected continued financial fallout for the operational fiasco as travellers start to cash in vouchers and points – which are not recorded as costs until redeemed.
In early January Southwest chief executive Bob Jordan said that the carrier was processing ‘tens of thousands of refunds and reimbursements a day’ as well as offering 25,000 Rapid Rewards points to each passenger worth around $300.
But the compensation action will do little to placate US lawmakers who are now mulling additional regulation for the airline industry.
A group of 26 House Democrats have sent a letter to US Transportation Secretary Pete Buttigieg calling on him to improve passenger protections and set standards for airlines to ‘maintain a reasonable level of operational capabilities’ during severe weather.
US Senate commerce committee chair Maria Cantwell also announced that her committee would be holding hearings into the merits of the Federal Aviation Administration examining how to strengthen consumer protections as part of the agency’s reauthorisation. The FAA’s operations must be reauthorised by September 30 and the process has traditionally been used to advance aviation reforms.
In a statement last month, Cantwell shared her concerns about the Southwest cancellations, saying many major airlines fail ‘to adequately communicate with consumers during flight cancellations” and that consumers deserved better protection’.
A consumer rights organisation has called on the UK government to bolster regulatory powers as a new survey by Which? found that 39% of adults did not trust airlines to treat them fairly if something went wrong.