The latest incident occurred in October, when Southwest ran a television ad claiming that flights to Chicago, Los Angeles and New York from Atlanta were only $59.
The issue arose when customers called to book the discounted seats and Southwest claimed that it was a mistake, tickets to those cities were never intended to be part of the Atlanta fare sale.
In the eyes of the Transportation Department, which announced its ruling on Thursday, Southwest's ads were deceptive and violated rules on advertising of airline fares."DOT's full-fare advertising rules were put into place to ensure that consumers are not deceived when they search for plane tickets," Transportation Secretary Anthony Foxx said in a statement. The rule essentially requires that any advertisement for tickets state the entire price to be paid and offer a reasonable number of seats at that price. "As soon as we became aware of our mistake, we pulled all incorrect advertisements off the air," Southwest spokeswoman Brandy King said in a statement, adding that the airline did honor the $59 fare. Regulators levied a $200,000 penalty for the October advertisements and imposed a $100,000 fine that had been suspended last July upon Southwest's pledge to correct its violations.
Shares of Southwest were recently trading at $26.56, up 12 cents. The stock has soared 41% so far this year, compared with a gain of 4% for the Standard & Poor's 500 Index. >>Read More: Is Google Crazy for Selling a PC at $350? Definitely Not >>Read More: Xerox Is the Biggest Secret in Value Stocks as It Moves Beyond Copiers >>Read More: Mark Zuckerberg Bets Big on the Bay Area At the time of publication, the author had no position in the stock mentioned. Follow @macroinsights This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV