This summer, Supply Chain Matters along with other blogs posted commentaries related to more evidence of the U.S. airline industry’s march to the bottom. More specifically, it was manifested by major IT systems outages that impacted individual airline performance, leaving hundreds of passengers scrambling to either re-schedule cancelled flights or miss important meetings and events.  In early August it was the system outage that impacted Southwest Airlines and over a week later, it was Delta Airline’s turn to be embarrassed while prompting a direct apology from the CEO.

Our takeaway was that It is no secret that the U.S. airline industry as a whole has managed to erode many forms of customer service to the point that constant delays and breakdowns in equipment and services have become the norm.  The entry of low-budget, low fare airlines prompted such a movement as these industry disruptors focused on higher efficiency and lower costs coupled with a differentiated experience for travelers. But alas, even the low-budget airlines are not immune to major disruption. Added to today’s conditions are the results of significant acquisitions among major as well low-budget carriers, prompting the need for IT systems and operational business process consolidation, some of which has not fared very well.

But, to be balanced, we should also call attention to a major IT systems that appears  have occurred smoothly.

This weekend, the newly merged American Airlines conducted a major IT system conversion that consolidated all of its pilots and planes onto what is described as single flight operating system. This effort essentially brought merger partner US Airways pilots onto the American flight operations system, a major step in integrating the two airlines from a flight and crew scheduling perspective. Such an effort required an immense amount of pre-planning since it involved a collection of what is described as more than 500 applications that manage everything from dispatching of crews to movement of aircraft.

As we all know, there is little or no tolerance for taking-down an airline’s backbone system that operates nearly around the clock. Hundreds of IT staff were reportedly deployed throughout the airline’s hubs and operational scheduling centers to assure a smooth transition without major glitches. Last Saturday was chosen to minimize any potential disruption and allow Sunday for needed adjustments. The CIO of American indicated to the Dallas Morning News that 1.3 million hours of IT staff time was invested in the conversion effort. That included a day long test dress rehearsal. Further, the airline’s pilots labor union took on an active involvement after months of warning of potential failure.  However, the union has expressed ongoing concerns for what it describes as a return of “toxic’ labor relations at American.

As of today, American has reported no cancellations or disruptions of flights as a result of this weekend’s systems switchover. For the first time, former US Airways pilots and legacy American pilots can now be scheduled for a singular American flight.

Two weeks ago, The Wall Street Journal reported that American is also planning to move major portions of its customer website, including as well as other applications to a totally Cloud-based deployment model. A decision on this move is planned “within months” according to the airline’s CIO. The move is designed to be able to leverage more on-demand compute power offered by the Cloud, especially during what is described as burst peak periods of booking and traveling. A proof-of-concept project has already been undertaken.

ken during the last several months to allow developers to rewrite some existing site code. This will be potentially be the next IT focused challenge for the airline.

As we opined in our prior airline industry focused commentaries, it clearly appears that accountants and financial engineering experts call the shots for airlines, an industry that was once customer and operational service focused. Then again, that is a challenge that extends across other industry settings as well.

The most advanced and flexible IT systems are a major operational requirement for airlines and the Cloud computing model may be a viable option to insure faster, more reliable technology that can flex with the overall network. If so, it will represent another major test of operational reliability that can meet cost control needs.


Bob Ferrari

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