Southwest to pour more booze; lawsuit settled over drink chits


It was just over two years ago that Southwest decided to forcibly expire old drink chits. It was not long after the policy change that a lawsuit was filed seeking to stay the enforcement, at least on the vouchers issued as part of the purchase of a Business Select ticket. And this week that suit was settled, with the airline agreeing to issue a new drink chit – with a one year expiry – to passengers who claim they purchased a Business Select fare and didn’t redeem the chit at that time.

There are several interesting bits of data which come from the suit and the settlement. On the settlement side, passengers will not be required to produce the unused chit to get the new one. The airline will set up a website which allows customers to enter the appropriate information and have the replacement issued. This is a very customer-friendly move and, in the words of the attorney responsible for the case, "a grand-slam result for the class."

The other interesting bit is the number of tickets sold and number of chits redeemed, as released through the case details. The suit suggests that about half of the eligible chits were never redeemed and that there are 5.8 million outstanding. That suggests about 11.6 million Business Select fares sold over the 35 month period the suit covers. I didn’t do all the analysis but that seems like a data point that competitors would be interesting to the industry and competitors and also a data point which isn’t generally publicly shared.

Most press coverage of the settlement is multiplying the 5.8 million outstanding vouchers by the $5 in-flight price, suggesting that the settlement will cost the carrier $29 million, plus a separate fund to pay legal fees of $1.5-7 million. The actual cost to Southwest, at least in fulfilling the settlement claim, is likely a tenth of that number or less; the mark-up rates on in-flight booze are ridiculous. Still the ~$10 million charge for handling this case is something the company will have to account for and every penny counts these days.

This isn’t the only time passengers have sued airlines over loss of benefits in some form or another. One interesting aspect of this class is that it explicitly excludes passengers who earned their drink chits via the company’s Rapid Reward frequent flyer program. Several recent suits have been tied to the loyalty programs rather than benefits offered explicitly related to the purchase of a specific ticket. That difference may ultimately be significant as the other suits wind their way through the legal process.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

9 Comments

  1. This is a fair result for those of us who fly on BS tickets. Many times we travel early in the day and nobody wants a beer at 8am when they have to deliver a powerpoint at 1pm.
    To be fair to WN they were forced to implement the overly restrictive “same day use” rule when a few criminal types decided to xerox their boarding passes to redeem for unlimited free drinks. But there must be a better way to deter fraud.

    1. I agree that many times it is not practical to have the drink during the flight. I’m not as convinced the company owed you another drink at some future point in time but I don’t really care all that much either. The company solved the fraud problem very easily. They now only allow the BP to be used on the day of travel. Seems like they’ve got it figured out.

  2. When I am in a similar situation, I would just order a mini -liquor anyway and stuff it in my bag for a later time. I hate seeing free things or a perk go to a waste when it requires little or almost no effort on my part.

  3. OK, it is settled. Since the BC consumer w as ‘harmed’ in only a tiny way, as is usually the case with Class Action suits, it is the scheming attorneys that reap the profits. Short of a major loss (one that I cannot perfectly define) I stay away from Class Action suits, believing that in the vast majority of cases they accomplish nothing other than enriching the opportunistic lawyers. One has to wonder just how many ‘injured parties’ suffered a loss greater than $25.
    Of course Southwest blew it – in two ways: First, those original coupons should have specified same day (or 48 hour?) use and second, changing the rules well into the promotional benefit was a seriously stupid move. That said, do $5 drink coupons warrant a 2+ year Federal Court case? I don’t think so. The lead plaintiff and his attorney should have more important business on their calendars. If the lead plaintiff was smart, his contract with the principal attorney should have included a 30% rebate of fees collected, but I suspect that the Federal Bar frowns on such agreements. In this case, Lawyers +2 and consumers -1. The original Federal Judge should have thrown this out (dismissed the case) and told the plaintiff to not grace his door again. In the end, it is the lawyers that cause the problems, not the plaintiff victims or the defending corporations. Nuff said.

  4. Yes, they should have put the proper T&C on the tickets to begin with. But they didn’t.

    Beyond that, the lead plaintiffs get an extra $15,000 each as part of the settlement, so there definitely was financial motivation on their part far in excess of the value of a few drink chits.

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