This week the Associated Press reported that two major labor unions at Southwest Airlines are demanding that the carrier replace its CEO because of a recent technology outage that resulted in the delay or canceling of thousands of flights. Twelve percent of the airline’s scheduled flights were reportedly canceled over a subsequent five day period.
The report and past outage, we believe, provides interesting operational management insights for our supply chain management focused readership. Right up-front, I want to warn readers that following may be appear as an overly lengthy rant, but perhaps it may well resonate.
On July 20th, Southwest Airlines experienced an elongated IT outage that involved a system-wide outage of reservation and scheduling applications. The airline’s Chief Commercial Officer indicated to AP that the outage will cost the airline tens of millions of dollars when the dust settles. He further stated that the IT outage was the worst he could recall in his 28 year tenure at Southwest. Of late, Southwest is not the only airline to experience IT disruption.
We all know that information technology applications are mission critical for the airline industry, in fact, they are equivalent in criticality to safe and consistent operation of aircraft. The airline was quick to blame a faulty router as the potential cause of the outage. That should sound familiar. However, IT experts have already opined that such an explanation likely does not hold water given the layers of redundancy that are built around airline transactional systems to avoid single points of failure. Instead, experts believe it points to broader software issues. Further noted by the AP report is that airline executives see existing labor unions as leveraging the outage to gain collective bargaining power.
This author has previously flown Southwest to many engagements. I did so for two specific reasons; one is the usually lower fares which are an important consideration for any business’s travel budget. The other was the airline’s demonstration of consistency, reliability and efficiency in spite of weather or unplanned events. We have observed erosion for both of these decision factors. Southwest’s air fares have been steadily increasing, lately with no differentiation from other carriers, and on some routes, higher than other carriers. As for efficiency, on a recent return trip from Nashville, our flight was delayed over six hours because of a combination of mechanical and weather issues. More revealing, constant updates to passengers, by our view, did not reflect the realities of what was actually happening. A smartphone search of FlightAware or other online weather sites yielded more realistic, plausible and more updated information, yet Southwest gate agents seem to have little of such knowledge. After four hours of waiting, patience grows very thin, and after six, transforms to disgust.
We state all of the above to focus on what is the key takeaway from the current state of Southwest and the U.S. airline industry overall. Key labor unions of the airline, those that the reader can assume have first-hand day-to-day knowledge claim that the airline has focused too much on investing in stock buybacks and more cost controls rather than investing in needed IT and flight operations management investments. Company management naturally views such statements as a means to gain leverage and influence in ongoing collective bargaining for higher wages and benefits. Translation- we need to keep our costs down.
What is missing in this discourse is the all-important customer view, those that actually engage the airline for travel needs and services. As our readers readily know, the supply chain exists to serve the customer by the most differentiating means.
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 such as Southwest prompted such a movement that was supposedly to focus on higher efficiency and lower costs coupled with a differentiated experience for travelers.
Today, it clearly appears that accountants and financial engineering experts call the shots for airlines, an industry that was once customer and service focused. We are charged added fees for baggage, priority boarding, preferred seating, meals, and the list goes on. All were expected services not so long ago. The further notion is that if I, the flying customer have to pay extra for such services, I damn well expect that such services will be differentiating and consistently delivered.
Today, there remains continued evidence that airline route scheduling is planned to keep aircraft operating as long as possible in a 24 hour period. Maintenance checks appear deferred to the point of actual component failures, overall network scheduling with little or no tolerance for weather occurrences and/or expected delays. People and airline crews often appear overworked and not valued. In short, the industry has sunk to its lowest common denominator and the once industry innovator, Southwest, is spiraling to the point to joining the company of once stellar carriers such as American and United who have managed to reach the bottom in customer service ratings.
Anyone who has had training and on-the-job experience in logistics or manufacturing operations knows the principles of network efficiency. Keep internal and external based processes well identified and as simple as possible. Plan-in redundancy or back-up resources in case of failures, and constantly maintain equipment to avoid operational breakdowns. Invest in people and maintain constant training for change and innovation.
For the airline industry, the analogy is an air traffic controller. She or he adheres to well understood processes, knows that unplanned disruption can occur on any given day or any given hour and utilizes well-defined, network-wide exception based processes to respond and manage such exceptions. All of this is supported by technology and training directed at supporting constant communication and information flow with built-in redundancy of processes. All is directed at enabling resources and customers to be better informed and anticipate disruption before it occurs. It is further enabled by people who care about excellence, pride and safety in what they do every working day.
The Southwest Airline and indeed the United Airlines sagas point to an overall industry and perhaps business wide problem that stems from a missing compass. Investor returns trump customer needs. Wall Street trumps overall customer satisfaction and labor relations trends.
If a business does not consistently invest in people, processes, technology and equipment, the results often speak for themselves. Short-term gains are nullified by long-term degradation.
Thanks for reading this entire commentary and please share your own perceptions as well.