DALLAS -- The U.S. Transportation Department said Wednesday it is investigating whether Southwest Airlines deceived customers by knowingly scheduling more flights in late December than it realistically could handle.
The department said that scheduling too many flights would be considered an unfair and deceptive practice under federal law.
"DOT is in the initial phase of a rigorous and comprehensive investigation into Southwest Airlines' holiday debacle that stranded millions," the department said in a statement.
The Transportation Department added that it will hold Southwest accountable if the airline fails to follow federal rules about refunds and reimbursing customers for expenses when flights are canceled. The agency said it will "leverage the full extent of its investigative and enforcement power" to protect consumers.
Southwest said its holiday schedule "was thoughtfully designed" with "a solid plan to operate it, and with ample staffing."
"Our systems and processes became stressed while working to recover from multiple days of flight cancellations across 50 airports in the wake of an unprecedented storm," Southwest said in a statement. The airline pledged to cooperate with any government inquiries and is "focused on learning from this event" and reducing the risk of a repeat.
Southwest canceled about 16,700 flights over the last 10 days of December. The meltdown began with a winter storm, but Southwest continued to struggle long after most other airlines had recovered, in part because its crew-scheduling system became overloaded. Union officials said they had warned the airline for years about the system, especially after similar but less severe flight disruptions in October 2021.
Dallas-based Southwest eventually resorting to cutting its schedule by about two-thirds to reset crews and planes, which it did successfully.
The airline hired consulting firm Oliver Wyman to study what went wrong. CEO Robert Jordan has said the company might speed up spending on some technology upgrades as a result of the crisis, but that he wants to complete the review first.
Southwest said this month that the cancellations will cost it up to $825 million in lost revenue and higher expenses including premium pay for employees and reimbursing customers for hotels and alternate flights. As a result, the company is expected to post a fourth-quarter loss when it reports results on Thursday.
The airline is also dealing with damage to its reputation for customer service. Analysts believe some customers may avoid Southwest for a short time, although airlines have usually bounced back quickly from other service failures.
The chair of the Senate Commerce, Science and Transportation Committee, Maria Cantwell, D-Wash., has promised to hold hearings on disruptions like the one at Southwest.