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.
- United responds to "lifetime" benefits lawsuit
- Lawsuit filed over United’s "lifetime" elite benefits
- Southwest to restrict drink coupons
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