Southwest Avoids $11 Million Fine for Holiday Travel Chaos. How It Got Off the Hook.

Southwest Airlines was hit with a record fine for its 2022 holiday travel meltdown. (Getty Images)

Southwest Airlines is off the hook for an $11 million fine over its 2022 holiday travel chaos after the Transportation Department waived the penalty due to improvements in the carrier’s performance.

The airline was hit with a $140 million fine under the Biden administration after it canceled close to 17,000 flights during the holiday travel period at the end of 2022—the largest-ever fine for flight disruptions.

Most of that went toward compensation for passengers but $35 million was due to be paid to the U.S. Treasury. The carrier has already paid two installments of $12 million and the remaining $11 million was due by Jan. 31, 2026.

But the Transportation Department issued an order waiving the final installment late Friday as Southwest has significantly improved its on-time performance. The Department said the move was in the public interest as it “incentivizes airlines to invest in improving their operations and resiliency, which benefits consumers directly.”

The Transportation Department said the carrier demonstrated it has invested more than $1 billion to improve its performance and reliability since the disruption over the 2022 holiday period. That includes upgrades to its crew and ground operations, customer service and its network operations control system.

“Southwest’s investments have led to meaningful improvements in the carrier’s on-time performance and completion factor year-over-year for each calendar year since 2023,” the Department said in an order explaining its decision.

A Southwest Airlines spokesperson said the company was “grateful” to Transportation Secretary Sean Duffy and the DOT for “recognizing Southwest’s significant investments in modernizing our operations.”

The holiday period can often be a frustrating one for those traveling by air, but Southwest—at least—looks like it has learned from the chaos of 2022 and is better placed to withstand the weather this year.

Write to Callum Keown at callum.keown@dowjones.com