U.S. plans to seek ‘higher penalties’ for airlines violating consumer protections

U.S. plans to seek 'higher penalties' for airlines violating consumer protections
© Reuters. A Delta Airlines flight descends past stormy clouds as it approaches to land in San Diego, California, U.S., December 12, 2022. REUTERS/Mike Blake/File Photo

By David Shepardson

WASHINGTON (Reuters) – The U.S. Transportation Department (USDOT) said it planned to seek higher penalties for airlines and others that broke consumer protection rules, saying they were necessary to deter future violations.

USDOT said in a notice posted on its website it intended to hold airlines, ticket agents and others “accountable and deter future misconduct by seeking higher penalties that would not be viewed as simply a cost of doing business.”

Airlines for America, an industry group, declined comment.

The notice comes after Transportation Department Secretary Pete Buttigieg vowed in recent days to take a hard line on Southwest Airlines (NYSE:LUV) if it failed to compensate travelers after cancelling nearly 16,000 flights in the week ending Dec. 29.

White House press secretary Karine Jean-Pierre said Tuesday the Transportation Department “will seek fines from Southwest if it doesn’t cover” required costs.

USDOT fines for airline consumer violations have often been a fraction of potential penalties. Last year, Air Canada agreed to a $4.5 million settlement to resolve a USDOT investigation into claims that thousands of air passenger refunds had been delayed. USDOT initially sought a $25.5 million penalty.

Air Canada got $2.5 million credited toward the settlement for passenger refunds and paid only $2 million in fines.

USDOT has proposed new consumer protection rules. Buttigieg successfully prodded airlines in August to make “significant changes” to customer service plans. Nearly all agreed to offer passengers meals and overnight stays for delays within their control.

In November, USDOT imposed penalties on another six airlines totaling just $7.25 million after they agreed to issue $622 million in passenger refunds.

Some in Congress and many state attorneys general want USDOT to get tougher on airlines.

In August, a bipartisan group of 36 state attorneys general

said they and the Federal Trade Commission (FTC) should have new powers to investigate airline passengers’ complaints. Under a 1958 law, passenger airlines are exempt from FTC oversight and most state investigations for consumer complaints.

“Americans are justifiably frustrated that federal government agencies charged with overseeing airline consumer protection are unable or unwilling to hold the airline industry accountable and to swiftly investigate complaints,” the attorneys general said.