The US government has decided to waive a significant portion of a record-breaking fine levied against Southwest Airlines for its catastrophic operational failure during a winter storm in late 2022.
The Record Penalty and Its Reduction
Under a settlement originally reached in 2023 during the Biden administration, Southwest Airlines agreed to a $140 million civil penalty. This was the largest fine ever imposed by the US Department of Transportation (DOT) on an airline for consumer protection violations.
The majority of that sum was directed toward compensating affected travellers. However, $35 million was designated as a payment to the US Treasury. Southwest made two instalments of $12 million in 2024 and earlier this year. In a surprise move on Friday, 5 December 2025, the DOT issued an order waiving the final $11 million payment, which had been scheduled for 31 January 2026.
Rewarding Operational Improvements
The department justified its decision by stating that Southwest deserved credit for substantially enhancing its performance and investing in its network resilience. In an official statement, the DOT explained its rationale.
"DOT believes that this approach is in the public interest as it incentivises airlines to invest in improving their operations and resiliency, which benefits consumers directly," the department said. "This credit structure allows for the benefits of the airline’s investment to be realised by the public, rather than resulting in a government monetary penalty."
The Cause of the Unprecedented Collapse
The historic fine stemmed from a severe winter storm in December 2022 that crippled Southwest's key hubs in Denver and Chicago. The situation spiralled out of control when the airline's internal crew-rescheduling system failed completely under the strain.
The resulting chaos was staggering. Southwest was forced to cancel approximately 17,000 flights, leaving more than 2 million travellers stranded during the busy holiday period. An investigation by the Biden administration concluded that the airline broke the law by failing to provide adequate assistance to customers stuck at airports and in hotels, forcing them to fend for themselves.
Customer service channels collapsed, with many passengers receiving only busy signals or being left on hold for hours. Even prior to the government settlement, Southwest admitted the meltdown had cost it over $1.1 billion in refunds, reimbursements, extra costs, and lost revenue.
