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'He's Failed to Take Real Action': Buttigieg Under Fire for Handling of Airline Debacle
"Secretary Buttigieg has spent months appearing to regulate rather than actually regulating," said one expert.
Dec 30, 2022
Transportation Secretary Pete Buttigieg is facing growing backlash from members of Congress and corporate watchdogs who say his department failed to take sufficient action in the lead-up to mass flight cancellations surrounding the Christmas holiday, a meltdown that has its roots in decades of airline consolidation, greed, and lax oversight.
On Thursday, Rep. Ro Khanna (D-Calif.) took to Twitter to argue that "this mess with Southwest could have been avoided," singling out the airline responsible for the overwhelming majority of recent flight cancellations in the United States.
Khanna noted that he joined Sen. Bernie Sanders (I-Vt.) earlier this year in urging the Department of Transportation (DOT) "to implement fines and penalties on airlines for canceling flights" after a wave of cancellations during a July 4 travel surge. Sanders specifically called for a "fine of $27,500 per passenger for all domestic flights that are delayed more than two hours and all international flights that are delayed more than three hours when passengers are forced to wait on the tarmac," as well as a "fine of $15,000 per passenger for all domestic flights that are delayed more than two hours."
"Why were these recommendations not followed?" Khanna asked Thursday.
The Transportation Department did fine six airlines a total of $7.25 million in November for major delays in refunding customers whose flights were canceled or changed, but Southwest and its top competitors were spared any penalties, prompting criticism that Buttigieg left out the "worst offenders."
William McGee, a senior fellow for Aviation and Travel at the American Economic Liberties Project, argued Thursday that while "there's plenty of blame to go around" for the latest cancellation crisis, "Secretary Buttigieg has spent months appearing to regulate rather than actually regulating."
"How do I know? Because I've spent thousands of hours annually for 23 years fighting airlines. Those of us in advocacy trenches can testify to DOT inaction," McGee wrote. "Criticizing [Buttigieg's] lack of action is neither unfair nor inaccurate. When advocates met with him in 2021, most of us were impressed and optimistic. But he's failed to take real action."
"He has broad powers to act on unfair and deceptive acts—and airlines have done both," McGee added. "Southwest was inevitable after he failed to punish awful behavior all year."
\u201c17/17 And so @econliberties is proposing a better, more passenger friendly industry. Let's eliminate federal preemption, so airlines can be treated as all companies are\u2014subject to oversight. And please write to #EndAirlineGreed:\nhttps://t.co/pw5PkumlrK\nhttps://t.co/GcbDONkmj1\u201d— William J. McGee (@William J. McGee) 1672387670
In the face of mounting criticism, Buttigieg on Thursday sent a letter to Southwest CEO Bob Jordan calling the airline's mass cancellations "unacceptable" and demanding that affected passengers be refunded as required under federal law, which mandates refunds if airlines cancel or significantly delay flights and the customer opts not to travel.
"I hope and expect that you will follow the law, take the steps laid out in this letter, and provide me with a prompt update on Southwest's efforts to do right by the customers it has wronged," wrote Buttigieg, who in September downplayed the potential for holiday travel chaos.
The letter and Buttigieg's promise to investigate airline violations are unlikely to quell outrage over the Transportation Department's tepid approach to the industry's misconduct, which state officials and members of Congress had been vocally warning about months ahead of the current debacle.
In November, Sens. Ed Markey (D-Mass.), Maria Cantwell (D-Wash.), and Richard Blumenthal (D-Conn.) called on Buttigieg to strengthen the Transportation Department's proposed rule aimed at bolstering protections for customers seeking ticket refunds.
The senators argued the rule, which has yet to be finalized, doesn't go nearly far enough to safeguard consumers and prevent airlines from skirting the law.
"Of the nearly 16,000 complaints to DOT in the first half of 2022, nearly two-thirds—10,089—were about airline refunds, compared to just 742 refunds complaints in 2019, an increase of 1,260%," the lawmakers wrote. "These numbers tell a clear story: Airlines are delaying and canceling historic numbers of flights and failing to provide consumers with the refunds to which they are entitled."
As The American Prospect's Robert Kuttner explained, the DOT rule in its current form "does nothing to force the airlines to refund the roughly $10 billion still owed to consumers for canceled flights since the pandemic began in 2020."
"It does nothing but allow DOT and Buttigieg to claim they are making an advance on policy while actually taking a step backwards. Codifying the policy will take time and resources away from just enforcing the existing interpretation, at a time when cancellations are high," Kuttner added. "These actions amount to a smoking gun. The airlines are mocking DOT policy, and Buttigieg is letting them get away with it. By kicking the can down the road with a new rule that will be subject to an extended comment period and further delay, Buttigieg lets the airlines off the hook for actions that flagrantly violate current DOT policy right now."
In early August, Markey joined Sen. Elizabeth Warren (D-Mass.) and other lawmakers in introducing legislation that would "provide consumers an enforceable right to a full cash refund for flight and ticket cancellations" and enact other reforms that go beyond the DOT's proposed rule.
"Enough is enough: Travelers are sick of wasting their valuable time fighting the airlines to receive their legally-required cash refunds," Markey said at the time. "And they are tired of making flight reservations months in advance, only to face a health scare that forces them to choose between canceling a nonrefundable flight, or traveling and risking the health of their fellow passengers."
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Sanders Calls on Buttigieg to Hold Southwest CEO Accountable for 'Greed and Incompetence'
"This is a company that got a $7 billion taxpayer bailout and will be handing out $428 million in dividends to their wealthy shareholders," said Sen. Bernie Sanders.
Dec 29, 2022
Sen. Bernie Sanders on Wednesday urged the Transportation Department to ensure Southwest's chief executive pays a price for mass U.S. flight cancellations that have left passengers and employees stranded around the country, throwing lives into chaos and drawing further attention to the company's business practices.
"Southwest's flight delays and cancellations are beyond unacceptable," Sanders (I-Vt.) wrote on Twitter. "This is a company that got a $7 billion taxpayer bailout and will be handing out $428 million in dividends to their wealthy shareholders. The U.S. Department of Transportation must hold Southwest's CEO accountable for his greed and incompetence."
Bob Jordan, who has worked for Southwest for decades and became the company's CEO earlier this year, acknowledged on Tuesday that the airline needs to "upgrade" its outdated scheduling system and other technology that flight attendants and pilots have been warning about for years.
"For more than a decade, leadership shortcomings in adapting, innovating, and safeguarding our operations have led to repeated system disruptions, countless disappointed passengers, and millions in lost profits," the Southwest Airlines Pilots Association (SWAPA) said in a statement Wednesday. "The holiday meltdown has been blamed on weather that had been forecast five days prior, but this problem began many years ago when the complexity of our network outgrew its ability to withstand meteorological and technological disruptions. SWAPA subject matter experts have repeatedly presented years of data, countless proposals that make Southwest pilots more efficient and resilient."
Instead of investing more heavily in such critical upgrades, Southwest pumped billions of dollars into stock buybacks in the years leading up to the Covid-19 pandemic.
Jordan took over as chief executive in February, receiving a generous compensation package that could amount to $9 million for the year. Earlier this month, just weeks before the airline began canceling thousands of flights per day, Jordan announced that the company would reinstate its quarterly dividend, which was suspended at the beginning of the pandemic.
The current payout of 18 cents per share, set to reach shareholders next month, will cost the company $428 million a year.
In an internal message to employees on Tuesday, Jordan said of the ongoing meltdown, "This stops with me."
"I'm accountable for this and I own our issues and I own our recovery," Jordan added.
"Southwest's flight delays and cancellations are beyond unacceptable."
Like Southwest's management, the Transportation Department—headed by Pete Buttigieg—knew there was potential for a holiday travel crisis. The department is currently investigating the ongoing flight cancellations.
"Before the debacle, attorneys general from both parties were sounding alarms about regulators' lax oversight of the airline industry, imploring them and congressional lawmakers to crack down," The Leverreported Wednesday. "Four months before Southwest's mass cancellation of flights, 38 state attorneys general wrote to congressional leaders declaring that Buttigieg's agency 'failed to respond and to provide appropriate recourse' to thousands of consumer complaints about airlines' customer service."
"Weeks before that, New York Attorney General Letitia James (D) sent Buttigieg a letter warning of 'the deeply troubling and escalating pattern of airlines delaying and canceling flights' particularly during holidays," the outlet added.
In November, Buttigieg leveled fines totaling $7.25 million against six airlines for "extreme delays in providing refunds" to customers whose flights had been canceled or significantly altered.
But critics said the punishment was far from adequate, and neither Southwest nor its main competitors were among the companies ordered to pay penalties. The Lever noted Wednesday that Southwest "has spent more than $2 million on lobbying since Biden took office and Buttigieg became secretary of Transportation," and he has faced withering criticism for refusing to take on the increasingly consolidated airline industry.
\u201c1) My @econliberties colleagues released model legislation in September aimed at repealing a thing called federal preemption in the airline industry. You can read about it here: https://t.co/8e9dEmbD7K\u201d— Katie Van Dyck (@Katie Van Dyck) 1672263469
According to Bloomberg, Buttigieg told Jordan on Tuesday that the Transportation Department "expects that Southwest will meet its obligations to passengers and workers and take steps to prevent a situation like this from happening again."
The Christmas travel crisis isn't the first time this year that U.S. airlines have faced backlash over mass cancellations. Around the July 4 holiday, major airlines including Southwest canceled or delayed thousands of flights amid a travel surge.
At the time, Sanders wrote a letter calling on Buttigieg to strengthen federal regulations to impose a fine of "$27,500 per passenger for all domestic flights that are delayed more than two hours and all international flights that are delayed more than three hours when passengers are forced to wait on the tarmac."
The senator also urged the Transportation Department to fine airlines "$55,000 per passenger if they cancel flights that they know cannot be fully staffed."
Buttigieg has yet to do either.
Sen.-elect John Fetterman (D-Pa.), who joined Sanders in calling for a crackdown on the airline industry earlier this year, wrote on Twitter Wednesday that "airlines have a responsibility to their customers."
"When they fail," he added, "we must hold them accountable."
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