Southwest Air Fined for Deceptive Advertising - Wall Street Journal

Updated May 29, 2014 1:20 p.m. ET

The U.S. Department of Transportation on Thursday fined Southwest Airlines Co. LUV +0.04% Southwest Airlines Co. U.S.: NYSE ^$26.45 +0.01 +0.04% May 30, 2014 4:01 pm Volume (Delayed 15m) : 6.46M AFTER HOURS ^$26.46 +0.01 +0.04% May 30, 2014 5:11 pm Volume (Delayed 15m): 577,685 P/E Ratio 22.04 Market Cap $18.29 Billion Dividend Yield 0.91% Rev. per Employee $396,645 05/29/14 Déjà Vu? Budget Jets Take On L... 05/29/14 Southwest Air Fined for Decept... 05/21/14 U.S. Government Proposes Requi... More quote details and news » LUV in Your Value Your Change Short position $300,000 for allegedly violating its full-fare advertising rules.

The Dallas-based discount carrier was fined $200,000 for running TV ads in the Atlanta area last October, offering $59 sale fares to New York, Los Angeles and Chicago on certain dates, the government said. An investigation revealed Southwest didn't have any seats available for that price between Atlanta and the three other cities on any of the applicable travel dates.

This violation caused Southwest to fall afoul of a cease-and-desist order dating from July 2013 on the same infraction, causing the government to require an additional payment of $100,000. That was half the original penalty, which was suspended from the first order.

By advertising fares for which no seats were available, Southwest violated the full-fare advertising rule and engaged in prohibited unfair and deceptive practices, the Transportation Department said. The rules require that any advertisement for tickets states the entire price to be paid and offers a reasonable number of seats at those prices.

Southwest said Thursday that the audio portion of the TV ads shown in the Atlanta market last year incorrectly named three cities that weren't intended to be part of the $59 fare sale. "As soon as we became aware of our mistake, we pulled the incorrect advertisements off the air and honored the $59 price point for any consumers who called our reservations centers," a spokeswoman said.

Write to Susan Carey at susan.carey@wsj.com

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