Southwest Airlines Co.
) has been reportedly fined $200,000 for misleading customers
through deceptive TV commercials.
According to the U.S. Department of Transportation (DOT),
Southwest Airlines advertised flight fares for a mere $59 from
Atlanta to New York, Chicago and Los Angeles. However, no seats
were booked at that price. Consequently, regulators charged the
company for violating rules related to advertising of airline
For several years, carriers have attracted customers by creating
a mirage of low fares (minus taxes and other fees) and this
continues to be one of the finest advertisement strategies till
date. It is estimated that carriers conceal approximately 20% of
the additional fare costs while advertising prices. In recent
times, a rapid upsurge has been witnessed in such practices given
online promotion on various websites including social networking
However, this does not seem to go down well with consumer
forums. Several of them have allegedly charged airlines for
misleading customers. Way back in 2011,
Spirit Airlines, Inc.
) was fined approximately $50,000 on similar grounds.
To resolve such issues, and more importantly, prevent them from
resurfacing, DOT brought into existence a new law in Dec 2011 that
required airline companies to highlight all government taxes and
surcharges while advertising the prices for their flights.
Top discounted carriers like Southwest Airlinesand Spirit
Airlines had then stood against the law enforcement citing
violation of free speech rights on a commercial platform.
For an industry with current market capitalization of over $30
billion, the new rule then had indeed come as a major setback. On
the bright side however, the changed regulation meant positive
impact on customer satisfaction for an industry struggling to
stabilize its customer services that shrunk when carriers
implemented several cost control measures.
Southwest Airlines currently sports a Zacks Rank #1 (Strong
Stocks worth considering with a similar Zacks Rank #1 are
American Airlines Group Inc.
Delta Air Lines Inc.
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SOUTHWEST AIR (LUV): Free Stock Analysis Report
DELTA AIR LINES (DAL): Free Stock Analysis
SPIRIT AIRLINES (SAVE): Free Stock Analysis
AMER AIRLINES (AAL): Free Stock Analysis Report
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