— Southwest Airlines is fined $140 million for 2022 holiday meltdown, the largest penalty in DOT history for consumer protection violations.
— Ann Carlson is leaving NHTSA months after her nomination was withdrawn due to GOP opposition.
— The Biden administration considers military action against Houthi attacks on commercial shipping in the Red Sea.
IT’S MONDAY: You’re reading Morning Transportation, your Washington policy guide to everything that moves. You can reach Alex, Oriana, Tanya at [email protected], [email protected], [email protected], respectively. Find us all on the platform formerly known as Twitter: @alextdaugherty,@TSnyderDC, @oriana0214.
JUST IN TIME FOR THE HOLIDAYS: DOT announced Monday that Southwest Airlines will pay a record $140 million fine for failing to provide adequate customer service assistance, failing to promptly provide flight status updates and failing to provide refunds in a timely manner. DOT says the fine is “30 times larger than any previous DOT penalty for consumer protection violations.” DOT Secretary Pete Buttigieg said the fine “sets a new precedent and sends a clear message: If airlines fail their passengers, we will use the full extent of our authority to hold them accountable.”
Read the fine print: While DOT issued a $140 million fine, Southwest will only pay $35 million to the U.S. government. The airline received a $72 million offset for setting up a compensation system for Southwest passengers in the future and received a $33 million credit against the penalty for issuing reward points to affected Southwest passengers early this year.
But the fine means that DOT’s investigation into Southwest’s scheduling practices has concluded without a finding. DOT said it is “closing the unrealistic scheduling investigation without making a finding as its goal is to obtain quick relief for the public.” In addition to the fine, DOT said Southwest is setting up a $90 million compensation system for future vouchers that would be issued to Southwest customers who experience a controllable cancellation or delay. Southwest will provide a $75 transferable voucher if a passenger arrives at their destination more than three hours after their original scheduled arrival time. That voucher is in addition to rebooking, hotel and food provided during a delay. Read DOT’s consent order here.
DOT also said it “ensured” that Southwest passengers who experienced headaches during the 2022 travel season received more than $600 million for delays and cancellations, along with the airline’s decision to provide 25,000 miles to affected passengers. In total, the 2022 meltdown cost Southwest more than $750 million in direct costs. Oriana has more.
Southwest said it will pay out the fine over a three year period and it “appreciates acknowledgement that it moved expeditiously to care for customers, learned from the event, and can now shift its entire focus to the future.” Southwest President and CEO Bob Jordan said in a statement the airline has “spent the past year acutely focused on efforts to enhance the customer experience with significant investments and initiatives that accelerate operational resiliency, enhance cross-team collaboration and bolster overall preparedness for winter operations.”
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CARLSON OUT: Acting NHTSA Administrator Ann Carlson will step down from her position on Dec. 26, according to emails viewed by POLITICO, and leave the agency altogether at the end of January after a short stint in her role as chief counsel. Carlson’s departure was first reported by Reuters. Carlson was nominated to lead NHTSA but eventually withdrew in May amid Senate GOP opposition and concerns from oil and gas groups about her environmental work. Carlson was an environmental law professor at UCLA before joining NHTSA. Despite removing herself from the confirmation process, Carlson continued to lead the agency in an acting capacity.
Just last week, Carlson made news by announcing a sweeping recall of 2 million Teslas following an investigation into the “Autopilot” feature, finding that it could increase the risk of a crash. NHTSA also announced last week it is gathering information in advance of a potential rule to determine what kinds of impairment detection technology could be deployed in vehicles to prevent an impaired driver from getting on the road.
NHTSA hasn’t had a White House nominee for the administrator post since Carlson withdrew in May. Deputy Administrator Sophie Shulman will take over NHTSA leadership on an acting basis, according to emails reviewed by POLITICO.
FIRST IN MT: A group of consumer and antitrust organizations are urging the Biden administration to block the proposed merger between Alaska Airlines and Hawaiian Airlines by using a similar playbook deployed to oppose the merger between JetBlue Airways and Spirit Airlines. In a letter led by the American Economic Liberties Project, the groups write to DOT Secretary Pete Buttigieg and DOJ antitrust chief Jonathan Kanter saying the proposed merger “threatens to lessen competition in the airline industry.” They said the Alaska-Hawaiian merger must face the “same scrutiny” as the JetBlue-Spirit deal and DOJ efforts to break up the Northeast Alliance between JetBlue and American Airlines.
The groups say a potential merger would reduce airline competition in the state of Hawaii, and between West Coast long-haul flights, and hurt air travel across the Pacific Rim region because Alaska is a member of the oneworld Alliance. They’re urging the DOJ to block the proposed deal in court and for DOT to use its Title 49 authority to fight the deal.
SAF UPDATES INCOMING: The Biden administration issued initial parameters Friday on a tax incentive under Democrats’ climate law aimed at helping cut emissions from aviation that will allow numerous fuels to qualify — but punted critical decisions on changes to emissions modeling into the election year, POLITICO’s Kelsey Tamborrino reports. The Inflation Reduction Act created a new tax incentive for the sale and mixture of sustainable aviation fuel for this year and next. The Treasury Department said Friday that several fuel pathways will qualify for the lucrative tax credit. And it backed the Energy Department’s Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model as a potential methodology to qualify for the credit, but with updates that EPA and the departments of Transportation, Agriculture and Energy committed to releasing by March 1.
Meaningful toward reductions? But as Kelsey reports, debate has erupted around quantifying the emissions from SAF, with environmental, aviation, transportation and biofuels groups steadfastly divided. NATSO, representing America’s travel centers and truck stops, on Friday threw cold water on the move, stating it won’t actually make any meaningful progress toward lowering transportation emissions.
Tax parity, please: The announcement is “designed to appease the agriculture industry through higher subsidies, and the airline industry through taxpayer subsidized greenwashing,” said David Fialkov, NATSO’s executive vice president of government affairs. In a secondary release, NATSO, together with SIGMA — which represents retailers and marketers of motor fuel — said as the GREET model is updated in the coming months, the groups “will keep a close eye to ensure that the process is driven by science rather than politics.”
CONSIDER CLIMATE CHANGE: DOTIG last week said the FAA needs to create a better plan to prioritize projects that address climate change using funding the agency received through the 2021 infrastructure law. Since there’s currently no adequate framework to “prioritize projects that address climate change in its standards,” FAA and airports “are not required to consider climate change impacts when proposing infrastructure projects,” DOTIG said in an audit report. FAA is studying the issue — but the study won’t be ready until 2026, and airports and facilities won’t be able to consult the study before receiving additional funding.
FIGHT BACK? The Biden administration is actively weighing actions to fight back at Houthis in Yemen after the group backed by Iran continues to attack naval and commercial ships in the Red Sea, Lara Seligman and Alexander Ward report. The administration has been cautious about responding militarily to the attacks, for fear of provoking Iran.
But Maersk, the world’s largest container shipping company, said Friday it would halt all shipping through the Bab el-Mandeb Strait between the Red Sea and Gulf of Aden because of the increasing attacks. A prolonged slowdown or stoppage of key shipping routes off the coast of Yemen could eventually lead to supply chain headaches across the world.
FAA WATCH: The bill itself isn’t controversial, but a two-month FAA extension H.R. 6503 (118) continues to sit in limbo as the Senate returns to Washington to potentially hash out a border-Ukraine bill. Sen. Michael Bennet (D-Colo.) placed a hold on the bill and blocked unanimous consent for the measure last week on the Senate floor, though he doesn’t have a substantive problem with extending the FAA’s current authorization to allow for more time to hash out a bill. If the hold remains, Senate Majority Leader Chuck Schumer would be forced to use floor time to pass the FAA extension.
We expect the FAA extension to eventually be approved by unanimous consent, but the timing is TBD. After Senate Commerce ranking member Ted Cruz (R-Texas) accused Bennet of potentially hurting holiday air travel by blocking the FAA extension, Bennet replied that there’s time to spare because the current authorization doesn’t expire until Dec. 31.
But Senate Republicans are also pessimistic over the larger FAA bill, S. 1939 (118), that’s been in limbo since June. Despite a compromise on pilot training changes, Republicans now say that pilot unions are digging in on keeping the pilot retirement age at 65 — and that Democrats are moving the goalposts on the FAA bill. Cruz said unless the issue is resolved ahead of the new March 8 deadline (provided the temporary extension eventually passes) the FAA faces the real prospect of not getting a long-term authorization until 2025.
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— “When railroad workers get hurt on the job, some supervisors go to extremes to keep it quiet.” ProPublica.
— “‘Disorganized and confusing’: Lawmakers, industry rip Pentagon plans for drones.” POLITICO.
— “MTA says NJ misled and mischaracterized congestion pricing plan.” POLITICO.
