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"Weather" covers a lot of sins. You will find that a lot of what gets called (and allowed to be called by the FAA/DOT) "weather" is, as you point out, not really weather, but operational choices.

When a storm hits a city, yes, the first plane that had to wait to take off from the airport can be said to be delayed by weather. Every other plane waiting in line behind that plane, delayed, or because they weren't able to get to that city from other destinations because they run an overly tight schedule, is due to operational choices by the airline.

Some airlines have hubs in places where snow is handled ok. Some don't. Others have them in places that have frequent thunderstorms. Some airlines operate in Hawaii and never have delays.

JetBlue used to fly A321s across the country and in the winter, strong winds would force them to stop in Kansas to refuel. That's "weather" but also the airline's choices about how to operate.

I don't think you'll ever find the FAA/DOT is going to "root cause" what weather means to airlines to be able to blame them for operational / strategic choices. It would be like the police writing up your car accident report and saying that the reason you had a fender bender was because you chose to live so far away from work.

Thus, choose your airlines and roll your dice accordingly for when you want to get where you want to be.

Another example that bit me, flying from east coast to west coast. Storm in the Midwest we can easily avoid but that requires changing the route. Time to change the route with ATC + slightly longer flight time made the pilot time out, flight is cancelled and it’s the last of the night. AA refused to cover anyone’s accommodations because the problem was “weather”

I generally agree, but on the other hand I think the situation here presents a clear case where you could draw the line - if your airline is canceling at a rate that's, let's say, double the national average, you no longer get to claim weather.

It's difficult to punish the kind of individual cases you're describing, but from a game theory perspective that just means that in situations like today's, you bring down the hammer in incredibly punitive fashion in order to make a single systemwide failure like this so costly that it's a no-brainer to upgrade software and keep slack in the system (particularly at high-traffic, high-importance times like the holidays).

> Failures like this should trigger incredibly severe consequences (tickets refunded at 4x cost, $20/day paid to any passenger whose luggage is lost until they get it, lost slots in airports) that make it absolutely irrational to operate in the manner Southwest is

No need to implement the penalties you described if you’re simply trying to align incentives. Their market cap has fallen by $1b, primarily due to this incident.

Their market cap today isn't what matters - if people forget about this and continue to fly Southwest (which, let's be honest, many will), their share price will recover when they announce earnings.

The reality is they save a lot of money by keeping virtually no slack in their system and not doing things like scaling up customer service during the holidays. If they lose some money in flight cancellations, it's still rational for them to operate like this. Plus the reality is they probably won't actually lose much - most people whose flights were cancelled will still end up taking Southwest because it's too expensive (or not possible) to book last minute tickets on other airlines. That means they just push them into the very end of Dec/early Jan when they have open capacity anyway.

> people forget about this and continue to fly Southwest

For me it means that most customers would happily accept such a disaster once in a lifetime in exchange for, say, 10% ticket price reduction.

I think that's right. Customers have decided that maybe getting charged a couple full fares once every ten years is better than spending 10% extra on every ticket.

Which makes sense. The airlines have decided this as well.

While the capitalist in me agrees with you that this is one the market can sort out (and believe me, I'm going to pay more to not fly Southwest moving forward, at least for 2023), I do think that this is just a case where people are bad at making that calculation. I suspect most people would pay 10% more for even a relatively small reduction in likelihood of this kind of thing happening at Christmas, given the potentially huge costs if it does (missed time with family, being stuck in an airport for days with children, lost payments for hotels and other activities, etc.). People are generally quite poor at properly factoring in low-probability, high-impact events into their decisions, and I think that's happening here.

Now whether the government should step in to protect people from that bias is entirely another question. I would argue yes, but I can very much see the other side that would say to simply let the market sort it out.

> if people forget about this and continue to fly Southwest (which, let's be honest, many will), their share price will recover when they announce earnings.

Well, if you believe this, go buy their stock (LUV). The market disagrees.

I very well may buy some LUV depending on where they end up over the next few days. Remember the Equifax security breech that should have destroyed the reputation of that company in 2017?

Here's some historical stock prices

9/1/2017 $134.64 - everything's fine

9/15/2017 $87.99 - scandal breaks and hits the news

9/17/2018 $130.55 - one year post scandal

people forget

Yeah, I actually did really well after the Deepwater Horizon buying BP stock at the bottom, since the amount of value it lost in market cap exceeded the largest fine in history plus the cost of all the damage and lost oil by something like an order of magnitude.

That said, while in theory I actually think LUV is a decent trade right now, broader market conditions will keep me from messing with it.

A lot of this really does come down to the fact they don't fly hub-and-spoke.

When planes and crew are delayed somewhere, it cascades down the entire line and all the aircraft and crews are now at the wrong airports.

With the hub system, they can do a "return to base" and try to go from there, but with Southwest not having a "base" they have to esentially halt the entire system and reboot it, which is what is going on here.

At least that's part of the mess.