Southwest reimbursement timeline: Execs say it could be weeks

DALLAS — With its flights operating on a roughly regular schedule, Southwest Airlines is now turning its consideration to repairing its broken popularity after it canceled 15,000 flights round Christmas and left vacation vacationers stranded.

CEO Robert Jordan mentioned Thursday that Southwest has processed about 75% of the refund requests it has obtained. The airline has additionally returned most misplaced baggage to their house owners, and employed an outdoor agency to sift via requests for reimbursement of issues like accommodations and meals that stranded passengers paid out of their very own pockets, he mentioned.

The massive disruptions started Dec. 22 with a winter storm, and snowballed when Southwest’s historic crew-scheduling expertise was overwhelmed, leaving crews and planes out of place to function flights. It took the airline eight days to recuperate.

Jordan mentioned in a short interview that Southwest continues to be learning what went mistaken, and he doesn’t need to make modifications in expertise till that evaluation is completed. He expressed optimism however supplied few specifics about avoiding a repeat meltdown.

Southwest is giving 25,000 frequent-flyer points to prospects whose flights have been canceled or considerably delayed between Dec. 24 and Jan. 2, and appears to be making progress on refunds, however executives concede it will take many weeks to course of the reimbursement requests.

Danielle Zanin continues to be ready to listen to whether or not Southwest will cowl the $1,995.36 that she spent throughout a four-day odyssey getting her household of 4 dwelling to Illinois after their flight was canceled in Albuquerque, New Mexico. Even if she finally will get the cash, it might not be sufficient for her to strive Southwest once more.

“It would take a lot for the airline to prove to me that they can fix whatever technology they use to get flight crews and planes where they need to go. It’s just not worth the hassle that I went through,” Zanin mentioned. She mentioned she plans to return to flying on American Airlines even when it prices extra.

Southwest hopes that refunds, reimbursements and loyalty factors will persuade folks to not change to different airways, identified within the trade as “booking away.”

“Book-away typically has a short half-life, perhaps as little as a month, given it appears from many accounts that Southwest is being very generous reimbursing not only flight but other out-of-pocket costs” and is critical about fixing the technological shortcomings that made the disaster worse, mentioned Robert Mann, an airline guide in New York.

Retaining loyal prospects is essential if Southwest is to restrict the monetary injury of the meltdown. The firm has but to say how a lot cash it misplaced due to the canceled flights — Jordan promised extra information earlier than Southwest studies quarterly outcomes on Jan. 26.

Raymond James airline analyst Savanthi Syth estimated that the storm will price Southwest about $585 million in misplaced income, plus larger bills. Mann figures it’s between $500 million and $600 million in money, vouchers and frequent-flyer factors.

Airlines — together with Southwest as lately as October 2021 — have recovered shortly from earlier meltdowns, whether or not they have been brought on by dangerous climate, crew shortages, IT outages or different elements. Passenger numbers, in the event that they declined in any respect, recovered shortly.

“The reputational damage is only as relevant as what consumers can do about it,” mentioned Michael Mazzeo, who teaches technique at Northwestern University’s enterprise faculty and has examined airline competitors. “In a lot of markets, there is little or no competition to Southwest. When there is no outlet for consumers, the damage is more limited.”

Southwest, American, United and Delta management about 80% of the home air-travel market. Southwest — it began 50 years in the past as a low-cost competitor to massive airways however has regularly develop into rather more like them — has a very outsized presence in some massive states together with California, Arizona and Texas.

Southwest remained comparatively quiet for a number of days even after it turned clear that it was struggling whereas different airways recovered from the winter storm — and after it got here underneath repeated criticism from customers, media studies and Transportation Secretary Pete Buttigieg.

As canceled flights piled up day after day, Southwest gave few updates and rejected requests for interviews with key executives. It posted a video apology by Jordan Dec. 27, adopted a day later by a video with one other govt. Company executives didn’t communicate typically to the media till Dec. 29, once they introduced that Southwest would resume regular operations the next day.

“The company was slow to come forward in terms of corporate PR communications until the government went after them, the (Transportation) secretary called the CEO directly and demanded they move fast to take care of those people,” mentioned Larry Yu, a George Washington University professor who research disaster administration within the tourism trade. “Short-term, it’s big damage.”

But Yu additionally famous that Southwest has many years of popularity for comparatively low fares and good service to fall again on. He praised the airline for promising refunds, reimbursements and frequent-flyer factors.

“They have to do something to win back those customers,” Yu mentioned. Now, he added, Southwest should make good on vows to enhance its expertise, “because you don’t want to equate low-cost with low-tech.”

Jordan mentioned Southwest has good expertise, however he mentioned the airline will re-examine IT priorities as soon as it higher understands how the December failure unfolded.

The debacle has additionally centered consideration on Southwest amongst lawmakers in Congress.

Sen. Richard Blumenthal, D-Conn., mentioned Wednesday that he’ll re-introduce a “passenger invoice of rights,” which didn’t develop into regulation within the final Congress.

“The Southwest debacle creates a moment when the forces in favor of this kind of consumer-protection measure could prevail,” he mentioned in an interview.

The Senate Commerce Committee mentioned this week it will maintain hearings on the Southwest meltdown. Blumenthal mentioned witnesses ought to embody executives from Southwest and different airways.

“This problem (of flight disruptions) is hardly limited to Southwest, it’s hardly the first meltdown in airline travel, and it’s hardly unforeseeable,” Blumenthal mentioned. He mentioned it was baffling why Southwest had not improved its crew-scheduling expertise after it had failed throughout earlier disruptions in the summertime and fall of 2021.

Buttigieg has mentioned repeatedly that his division is watching Southwest carefully and can maintain it accountable to deal with prospects pretty.

Consumer teams have given blended grades to the Transportation Department’s oversight of airways. They seen the Trump administration as a low level, with few enforcement actions taken in opposition to airways even within the face of file client complaints. The Biden administration fined Frontier Airlines and several other overseas carriers final yr for not shortly paying refunds to vacationers whose flights have been canceled in the course of the early months of the pandemic, however advocates have been disenchanted that not one of the 4 largest U.S. airways have been fined.

The Transportation Department has the burden of implementing consumer-protection legal guidelines geared toward defending airline vacationers. Several client teams are urging Congress to let state officers and personal events sue airways to implement these legal guidelines — an effort that has been unsuccessful to this point.

“The airlines are going to lobby hard to have as little regulation as possible, but with each passing meltdown it becomes more apparent that real change is needed,” mentioned John Breyault, vp of public coverage on the National Consumers League.