Southwest Airlines Sued For Not Immediately Refunding Stranded Customers

A passenger is suing embattled Southwest Airlines over the airline's alleged failure to reimburse him and hordes of other customers for canceled flights.

The airline's contract of carriage mandates refunds for canceled fights, plus reimbursement for incurred costs like hotels, meals and rental cars, Louisiana-based passenger Eric Capdeville alleged in the proposed class-action lawsuit. 

"Southwest's failure to provide prompt refunds for canceled flights violates not only its own contract of carriage, but also federal law," states the lawsuit, filed in the Eastern District of Louisiana.

Dallas-based Southwest owes customers more than $5,000,000 in refunds, according to the suit. 

The suit stems from the cancellations of thousands of Southwest flights over the holidays that the airline blamed on winter weather.

No "comparable accommodations" provided

In October, Capdeville purchased a pair of tickets for travel from New Orleans, Louisiana, to Portland, Oregon, on Dec. 27, 2022. The flight was canceled and he was forced to forfeit reservations he'd paid for in Portland.

Southwest did "not offer any comparable accommodations on another flight," the lawsuit alleges. Nor was Capdeville offered a refund. Instead, he was offered airline credits for use on a future flight. 

This violates Southwest's own contract of carriage, according to the lawsuit. 

The contract states generally that when the carrier cancels or changes the schedule of a flight, it will, at the request of a passenger, re-accommodate the passenger on another flight, or refund the passenger the fare. The airline also promises to provide refunds within seven business days of a refund request for tickets purchased using a credit card, or within 20 days for tickets purchased with cash. 

"Neither provision provides for any 'credit' for use on a future Southwest flight," the lawsuit states.

Capdeville claims he wasn't offered any sort of comparable flight accommodation and was therefore owed a refund for the tickets he had purchased, but could not use. 

Efforts "to do right" underway 

Southwest Airlines on Tuesday said it would offer 25,000 frequent-flier points, worth more than $300, to travelers who were affected by the epic meltdown.

Southwest told CBS MoneyWatch it was in the process of refunding passengers affected by the holiday debacle.

"There are several high priority efforts underway to do right by our customers, including processing refunds from canceled flights, and reimbursing customers for expenses incurred as a result of the irregular operations," the airline said in a statement. "In fact, on December 28, we launched a website to assist customers with requesting refunds and reimbursements, and those requests are being processed and issued www.southwest.com/traveldisruption."

Regardless, experts expect Southwest to suffer long-lasting reputational damage, as well as be targeted by lawsuits from a variety of parties. 

"There is a standard pattern after a major reputational event. It beings with the event that is usually emotionally charged and leaves a lot of people disappointed, and thereafter every different stakeholder group will have their say. Customers will obviously be disappointed, employees will be disappointed, and shareholders will be disappointed," said Nir Kossovsky, a reputation risk expert. 

"Everybody has a piece of disappointment that will manifest in some kind of behavior — often litigation — that will cost Southwest for a long time," Kossovsky added. "There's a very long tail to a reputational event."