Southwest Meltdown Will Cost More Than $1 Billion
Southwest’s holiday meltdown will be costly. The airline revealed Thursday that it will take a $1 billion hit due to lost revenue from the canceled flights, and refunds and reimbursements for passengers.
The airline canceled more than 16,000 flights during the a 10 day period at the end of the year, from Dec. 21 through Dec. 31. The failure was first triggered by weather cancellations in the first days, but then it turned to massive disruptions. Southwest was canceling more than 60% of its flights for several days in a row.
The issue was caused by crew scheduling systems and software, which the airline had failed to update. Southwest said that it spent about $1 billion annually on technology and that its systems had functioned as designed. But they had been overwhelmed by the massive number of last-minute changes. As a result, Southwest had to manually adjust crew schedules.
Southwest has been issuing refunds to customers but not fast enough. Some customers who have received their refunds have complained that they received only a small fraction of claimed expenses.
Southwest has also sent out 25,000 points to most travelers who were flying during the holiday season.
Lower Spend - Chase Ink Business Preferred® 100K!
Chase Ink Business Preferred® is a powerful card that earns 3X Ultimate Rewards points in a broad range of business categories on the first $150K in spend per year. Right now earn 100K Chase Ultimate Rewards points after Learn more about this card and its features!
Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
I hope SW has insurance to help cover losses. I like SW, this is the first I have ever seen an airline step up right away and acknowledge they did wrong and offer a means to submit a claim. Usually, any carrier makes it challenging for one to submit any claim. They want you to go away. Today we got paid back every single dollar we spent, we were delayed 6 days before finally getting home! We were in Mexico, finally got into the USA then drove 21 hrs home. I submitted the claim and 2 weeks later they paid it. Our claim was for $4K+. It felt like a long time, the waiting… I have learned in dealing with any insurance co, not that this was an insurance claim, is you need to itemized the expenses and explain each expense. I provided a memo with explanations of all the expenses which included the extra fees we had to pay for parking and doggy daycare. Do not assume the receipts speak for themselves. Label each receipt and create 1 page Memo if needed (that is how long mine was) explaining the reason for the expenses. It is time consuming but it will pay off, anyone asking for a reimbursement will ask you to explain the expenses. If it is a small amount they will most likely not question it. Ask yourself would you pay someone back “X” dollars without an explanation, they must make us whole but that does not mean that we get to abuse the moment and incur expenses much higher than you would have incurred had the fault been yours – the reality is everyone has a duty to mitigate their damages. That is where “reasonable” comes in.