Order 2010-4-14

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 27th day of April, 2010

 Docket OST 2010-0005

 Southwest Airlines Co.

Violations of 14 CFR Part 250 and 

49 U.S.C. § 41712 Served April 27, 2010 

CONSENT ORDER

This consent order concerns violations by Southwest Airlines Co. (Southwest) of the 

Department’s oversales rule, 14 CFR Part 250, and the statutory prohibition against 

unfair and deceptive practices, 49 U.S.C. § 41712. The violations stem from the carrier’s 

failure 1) to furnish the required written notice to passengers who were denied boarding 

(“bumped”) involuntarily, and 2) to provide involuntarily bumped passengers with the 

appropriate amount and type of denied boarding compensation (DBC) in a timely 

manner. The order directs Southwest to cease and desist from such further violations

and assesses the carrier a civil penalty of $200,000.

The Department’s oversales rule reflects a balance between the right of individual 

passengers to obtain the services they purchase and the ability of carriers to market their 

services effectively. Part 250 permits airlines to sell more tickets for a flight than there 

are seats on the aircraft to be used for that flight. This allows carriers to fill seats that 

would otherwise have gone empty due to “no shows,” thereby resulting in efficiencies for 

carriers, including revenue enhancement, and benefits for passengers as a whole by 

enabling carriers to offer them lower fares. 

In exchange for the ability to overbook flights (a practice that would otherwise be unfair 

and deceptive or an unfair method of competition within the meaning of 49 U.S.C. 

§ 41712), the rule mandates compensation and other protections for passengers who hold 

“confirmed reserved space” on a flight, have complied with the carrier’s contract of 

carriage, have met the carrier’s requirements with respect to check-in time and 

appearance at the gate, and have been involuntarily denied boarding of their flight 

because it was oversold (“eligible passengers”). Under most circumstances, Part 250 

mandates that a carrier pay DBC to eligible passengers. However, before denying 
boarding to passengers against their will, a carrier must first solicit volunteers who are 

willing to give up their seats in exchange for compensation.1 If there are not enough 

volunteers, the carrier may deny boarding to other passengers against their will, provided 

inter alia “on the day and [at the] place the denied boarding occurs,” the carrier pays all 

eligible passengers with “cash or an immediately negotiable check for the appropriate 

amount of compensation.”2 The appropriate amount of DBC varies for each eligible 

passenger depending on the planned time of arrival at his or her destination of substitute 

transportation arranged (or offered to be arranged) by the carrier, the value of the unused 

portion of the passenger’s ticket to his or her destination, and whether the flight segment 

on which the bumping occurred was between U.S. points, or from a U.S. point to a 

foreign point.3 

Although Part 250 permits a carrier to offer free or reduced rate air transportation in the 

form of travel vouchers for use on future flights in lieu of a cash payment, the carrier

must first “[inform] the passenger of the amount of cash compensation that would 

otherwise be due and that the passenger may decline the transportation benefit and 

receive the cash payment.”4

 In other words, the carrier must apprise eligible passengers 

of their entitlement to cash/check compensation and the amount thereof in the event he or 

she prefers that form of compensation instead of a travel voucher. In order to ensure that 

these passengers have the ability to make informed decisions regarding the various DBC 

options available to them, a carrier is required to furnish them with a written statement, 

the text of which is specified in the rule, that explains the terms, conditions, and 

limitations of denied boarding compensation.5

 Violations of Part 250 also constitute 

unfair and deceptive practices and unfair methods of competition in violation of 49 

U.S.C. § 41712. 

The Department’s Office of Aviation Enforcement and Proceedings (Enforcement 

Office) has investigated Southwest’s compliance with Part 250. That investigation 

involved a review of information regarding consumer complaints involving Part 250 sent 

directly to Southwest as well as a comprehensive inspection at Southwest’s headquarters 

of the airline’s consumer complaint records, practices, and policies involving Part 250. 

 1

 14 CFR 250.2b(a).

2

 14 CFR 250.8(a). Offering or providing passengers denied boarding compensation does not relieve 

carriers from their obligation to perform the transportation promised under their contract of carriage with 

passengers. Therefore, in addition to receiving DBC, eligible passengers are entitled to keep their original 

ticket and use it on another flight. In the alternative, if eligible passengers choose to make their own 

arrangements, they can request an “involuntary refund” for the ticket for the flight from which they were 

bumped. DBC is a separate right and is intended to compensate passengers for their inconvenience. Part 

250 makes clear that passengers are free to decline the DBC required under the rule and bring a private 

legal action.

3

 14 CFR 250.5(a). 

4

 14 CFR 250.5(b). 

5

 14 CFR 250.9(a). 
This investigation revealed numerous instances in which Southwest denied boarding to 

passengers, but did not follow one or more of the requirements of Part 250, as outlined 

above. These failures violated Part 250 and constituted unfair and deceptive practices and 

unfair methods of competition in violation of 49 U.S.C. § 41712. The Enforcement 

Office views the violations uncovered during its investigation as indicative of 

noncompliance with Part 250 by Southwest that must be rectified. 

In mitigation, Southwest states that it is proud of its exemplary record of regulatory 

compliance and customer satisfaction. Further, while Southwest regrets any violations of 

the Department’s oversales rules, Southwest notes that on the whole it has maintained an 

extremely high compliance rate with respect to Part 250, especially considering that 

Southwest carries over 100 million passengers per year and the number of alleged 

violations cited by the DOT is very small in comparison. Nevertheless, Southwest states 

that it is committed to achieving an even better compliance record, via additional training 

of frontline employees, as well as by implementing new technology that will assist those 

employees in handling oversales in order to reduce the possibility of manual errors 

occurring in the sometimes hectic oversale environment. In addition, Southwest points 

out that it is developing measures beyond what is required by Department rules to 

provide customers with clear and conspicuous notice of Southwest’s oversales policies 

and the rights of passengers under Part 250. To accomplish this, notices and links to 

further information will be integrated into the booking process on Southwest’s website, 

www.southwest.com, which is used by the vast majority of Southwest’s customers to 

research travel, purchase tickets, and print boarding passes. 

We have carefully considered the facts of this case, including the explanation provided by 

Southwest, and continue to believe that enforcement action is necessary. Southwest, in 

order to avoid litigation, and without admitting or denying the violations described above, 

agrees to the issuance of this order to cease and desist from future violations of 14 CFR 

Part 250, and 49 U.S.C. § 41712. Southwest further agrees to the assessment of $200,000 

in compromise of potential civil penalties otherwise assessable against it. Of this amount, 

$90,000 is due and payable within 30 days of the issuance of this order. Of the remaining 

portion of the civil penalty, $90,000 shall become due and payable if, within one year of 

the issuance of this order Southwest violates this order’s cease and desist or payment 

provisions, in which case the entire unpaid portion of the civil penalty shall become due 

and payable immediately and Southwest may be subject to additional enforcement action 

for failure to comply with this order, and up to $20,000 shall be credited to Southwest for 

funds expended within one year of the issuance of this order to develop and implement 

methods beyond what is required by Department rules to provide prominent and 

conspicuous notice to consumers of Southwest’s oversales policies and the rights of 

eligible passengers under Part 250. The Enforcement Office believes that this 

compromise assessment is appropriate in view of the nature and extent of the violations 

in question, serves the public interest, and provides a strong incentive to Southwest and 

all other airlines to comply with the Department’s denied boarding regulation.

This order is issued under the authority contained in 49 CFR 1.57(a) and 14 CFR 385.15.
ACCORDINGLY,

1. Based on the above discussion, we approve this settlement and the provisions of the 

order as being in the public interest;

2. We find that Southwest Airlines Co. violated 14 CFR 250.8(a), as described above, 

by failing to tender cash or an immediately negotiable check for the appropriate amount 

of compensation on the day and at the place the denied boarding occurred to eligible 

passengers who were denied boarding involuntarily; 

3. We find that Southwest Airlines Co. violated 14 CFR 250.5(a), as described above, 

by failing to pay eligible passengers who were denied boarding involuntarily the 

appropriate amount of denied boarding compensation specified in the rule; 

4. We find that Southwest Airlines Co. violated 14 CFR 250.5(b), as described above, 

by failing to inform eligible passengers offered travel vouchers of the amount of cash 

compensation that otherwise would have been due to them; 

5. We find that Southwest Airlines Co. violated 14 CFR 250.9(a), as described above, 

by failing to furnish eligible passengers who were denied boarding involuntarily with a 

written statement explaining the terms, conditions, and limitations of denied boarding 

compensation; 

6. By engaging in the conduct described in ordering paragraphs 2, 3, 4, and 5, above, 

we find that Southwest Airlines Co. engaged in an unfair and deceptive practice in 

violation of 49 U.S.C. § 41712;

7. We order Southwest Airlines Co. and all other entities owned, controlled by, or 

under common ownership with Southwest Airlines, Co., to cease and desist from further 

violations of 14 CFR Part 250 and 49 U.S.C. § 41712;

8. We assess Southwest Airlines Co. a compromise civil penalty of $200,000 in lieu of 

civil penalties that might otherwise be assessed for the violations described in ordering 

paragraphs 2 through 6, above, which amount shall be due and payable subject to the 

payment provisions set forth in subparagraphs 8(a) through (c) below:

a. $90,000 shall be due and payable within 30 days of the date of issuance 

of this order;

b. $90,000 shall be due and payable if, within one year of the issuance date 

of this order, Southwest Airlines Co. violates this order’s cease and desist 

or payment provisions, in which case the entire unpaid portion of the civil 

penalty shall become due and payable immediately, and Southwest 

Airlines Co. may be subject to additional enforcement action for failure 

to comply with this order; and
c. Up to $20,000 of the assessed civil penalty shall be credited to 

Southwest Airlines Co. for funds expended within one year of the 

issuance date of this order, in accordance with ordering paragraph 9, 

below, to develop and implement methods beyond what is required by 

Department rules to provide prominent and conspicuous notice to 

consumers of Southwest’s oversales policies and the rights of eligible 

passengers under 14 CFR Part 250;

9. Within 12 months of the issuance date of this order, Southwest Airlines Co. shall 

submit a statement of expenditures to the Office of Aviation Enforcement and 

Proceedings describing in detail the extent to which Southwest Airlines Co. has funded 

and implemented the methods described in ordering paragraph 8(c), above. The 

statement shall include the method(s) used to calculate and/or account for the expeditures 

and shall be accompanied by a sworn statement from an appropriate company official 

certifying that the statement of expenditures is true and correct to the best of his or her 

knowledge and belief after reasonable inquiry. The Office of Aviation Enforcement and 

Proceedings will notify Southwest Airlines Co. within 30 days of receipt of the statement 

of any amount not to be allowed as an offset and Southwest Airlines Co. shall pay that 

amount within 30 days of receiving the notification; and 

10. Southwest Airlines Co. shall pay the assessed civil penalty by wire transfer through 

the Federal Reserve Communications System, commonly known as "Fed Wire," to the 

account of the U.S. Treasury. The wire transfer shall be executed in accordance with the 

instructions contained in the Attachment to this order. Failure to pay the penalty as 

ordered shall subject Southwest Airlines Co. to the assessment of interest, penalty, and 

collection charges under the Debt Collection Act and to possible enforcement action for 

failure to comply with this order.

This order will become a final order of the Department 10 days after its service date 

unless a timely petition for review is filed or the Department takes review on its own 

initiative.

BY:

ROSALIND A. KNAPP

Deputy General Counsel

(SEAL)

An electronic version of this document is available at www.regulations.gov