This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Southwest Airlines Told Imaginary Seats Don't Count

Stocks in this article: LUV

NEW YORK (TheStreet) -- Southwest Airlines (LUV - Get Report) was fined $300,000 by the U.S. Department of Transportation for two incidents in which the airline advertised fares on seats that did not exist.

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.

Last July, the DOT claimed Southwest had violated rules during a Valentine's Day "Luv a Fare Sale" promotion. The airline advertised one-way, nonstop fares "for $100 or less." The DOT asserts, however, that Southwest "failed to include a reasonable number of seats available in a significant number of city-pair markets in the fare sale."

Southwest is known as a low-cost airline that skimps on luxury in order to get passengers from point A to point B for as cheaply as possible. Now fliers may have to be more wary of deals that appear too good to be true.

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.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs