For many US travelers, Southwest Airlines is a beloved travel partner. For stakeholders, Southwest has been one of the best-run airlines in the US for many years.
In the past week, however, the airline has hit a patch of significant turbulence. A perfect storm of issues hit the airline and highlighted several issues that were well-known, but historically not significant in terms of impact. And in some cases, were core factors to Southwest’s success.
So, what happened? How did inclement weather impact Southwest so much more than their competitors?
Southwest Airlines Business Model in Sharp Relief
To understand the issues, one must first understand that Southwest’s business model is a significant departure from most airlines. Most airlines use a hub and spoke model where air routes connect smaller airports to larger hub airports around the country. Flights go back and forth between smaller airports to hub airports. These hubs sit in bigger cities like San Francisco, Dallas, Chicago, Atlanta and New York. Larger airports are better suited to handle inclement weather as compared to smaller airports due to larger and longer runways, more runway options, better equipment and more highly trained staff.
Southwest, on the other hand, uses a direct route approach between airports small and large. Long Beach goes to Las Vegas to Phoenix to San Francisco.
With a hub and spoke approach, airlines can move crew and aircraft to different routes relatively quickly. With a direct route approach, if one route (ie: Long Beach to Las Vegas) becomes impacted, the rest of the route is impacted. In addition, the crew and aircraft are now out of position to fly the next route.
In the current situation, it means Southwest has a lot of crew and planes in places stranded and not able to continue the route.
During normal operations, the direct route method is a real benefit for travelers as they can likely get between smaller airports without having to make a connection in a large hub airport. And if they do need to connect, they are likely connecting in a smaller airport and possibly staying on the same aircraft.
The experience over the past few days has been anything but normal for travelers.
Airline and crew management systems under the microscope
One problem any company needs to consider is: Where are the weak points in their operations and how do they recover from abnormal situations?
During abnormal operations for Southwest, the process for crew rescheduling is to call an 800 number to coordinate the next steps of movement, scheduling, hotels, crew rest requirements, etc. With the significant weather impacting so much of the US, the crew call center got absolutely bombarded with inbound calls. News reports showed crew waiting hours on hold to figure out their next step.
And that is just the crew problem. Planes were out of position too.
For large airlines like Southwest, they often use antiquated flight and crew management systems that are decades old and developed by only a few companies like Amadeus, Apollo and Sabre. While newer versions and products exist, operating an airline is incredibly complicated. Major systems include reservations, airline inventory, flight operations, crew operations, loyalty, departure control, revenue management, partner management…and the list goes on. Each of these functions represent major systems.
Changing out just one of these systems is a huge process for any airline. The amount of risk from failure during a change is incredibly high and costly. Remember that airlines operate and fly 24×7.
Regardless, all airlines are actively looking at ways to navigate upgrades to their systems and operations to accommodate new technology and smarter management methods.
What lessons can the CIO learn from this?
The first objective is to clearly understand how the business operates. As outlined above, while Southwest Airlines and United Airlines are both competitors in the airline industry, their businesses operate very differently. Each have their pros and cons to their business model, approach and systems.
Understanding the business model and potential weak points is critical for any CIO regardless of industry. Layer in a systems analysis and organizational capability matrix and one can quickly see where the focus needs to be. The points identified need collaboration and planning across the organization. This process takes time. But the sooner you get started, the sooner you get to change.
The issues Southwest is experiencing, and learnings are equally applicable to just about any company in any industry. There are supply chain problems: Ensuring adequate capacity (planes, crew and supplies) to get products (passengers in this case) to their intended destination. There are organizational challenges: Ensuring the right people are where they need to be (crew, flight operations, ground operations, support staff). And there are technology challenges: Ensuring the right systems are in place to accommodate both normal and abnormal operations.
Abnormal operations should be expected in any business. What are the likely risk points and how will the organization react to them? How is the organization actively lowering their risk profile? How socialized are the risks across the organization? Is the organization regularly training for abnormal operations to build up muscle memory?
There are many questions that CIOs and organizations in general need to address before things go haywire.
It is easy to point the finger at new systems, processes and data-rich insights as the solution. However, the reality for a CIO of getting from point A to point B is easier said than done. It is time-consuming, risky and costly. Regardless, with the criticality of the airline business, change is needed.
For passengers currently impacted by the ongoing Southwest debacle, these points will offer little comfort. However, it should offer a bit of insight into the challenges and create a higher call to action for airlines and enterprises alike that are still leveraging older systems.