As millions of people traveled for the holidays, a widespread blizzard in December caused havoc and caused thousands of flights to be canceled or delayed across the nation.
Most airlines were able to stand up, clear the snow from their wings, and get things moving once more within a few days.
Southwest Airlines, not so.
Southwest's business crumbled beneath the weight of the snow as the blizzard exposed the fragility of its decades-old investment choices. The airline, a typically successful low-cost carrier, attempted to tread a fine line between investing enough in its total infrastructure to maintain the operation dependable and keeping prices low enough to be profitable, continue expanding, and keep rates lower than rivals.
As the airline canceled the majority of its flights for days after the storm passed, leaving millions of Americans stranded, it became apparent that the airline had made a mistake somewhere along the route.
Customers switching to other airlines has had an impact on the airline's bottom line six months later. It also disbursed hundreds of millions of dollars to defray the costs associated with the collapse that left its passengers stranded.
Southwest executives, who had previously referred to the episode as an "incident" while actually calling it a systemic failure, now publicly claim that those passengers are returning. The airline, according to them, is attempting to demonstrate that it is making the required adjustments to avoid another comparable collapse.
Earlier this spring, we spoke with three top airline officials, including CEO Bob Jordan, during an exclusive interview aboard a chartered Southwest flight from Long Beach, California, to Honolulu on the carrier's new 737 MAX which was decorated with Hawaiian-themed artwork. We talked about the airline's reaction to the crisis, its strategies for avoiding a repeat, and its goals for regaining the faith of its patrons.
Avoiding another collapse
In recent months, Southwest has generally outlined its measures to avert another incident, including at investor events, congressional hearings, and earnings calls.
Chief Operating Officer Andrew Watterson informed us that the airline is investing in new tools for the division in charge of scheduling its crew members to address one of the major points of failure from the winter. Pilots and flight attendants during the Christmas chaos who were left stranded due to delayed and canceled flights were unable to contact crew scheduling for hours to be moved to another flight.
CEO Bob Jordan stated that the lack of communication was not primarily caused by staffing in the crew scheduling department.
To handle a situation of this magnitude over the phone, you could never have the necessary people on hand, according to Jordan. "We are currently working on implementing electronic acknowledgment and communication with our crews."
Along with other advancements and automation, the newly enhanced system, which Watterson claimed is still being finalized and launched, enables crew members and schedulers to coordinate adjustments and communicate electronically.
When operational issues put pilots and flight attendants out of position, Jordan continued, they "shouldn't have to call in the first place."
In order to address "this specific issue of it being able to technically handle these large-scale problems," Jordan added, the airline has already made a number of upgrades to its staff scheduling software. He said that the airline has made additional phone system modifications for odd issues that cannot be resolved electronically.
Jordan acknowledged that there was still work to be done, particularly in terms of implementing the new tools and practices that go along with them while working with the unions of the workers.
The airline's executives are also working on other problems at the same time.
Even though the storm was predicted many days in advance, the airline was unable to round up enough de-icing personnel and equipment to keep planes flying, especially in its focal city of Denver. Some workers called in sick during the holidays because of the chilly weather, slightly exacerbating an already serious staffing issue.
Jordan stated that the airline was investing in new machinery and creating infrastructure to handle winter storms in addition to employing and training more deicers.
A crucial concern, according to him, is "having enough deicing trucks, deicing pads, the right deicing software that provides holdover times, and in some cases, the right level of deicing personnel." "Really, that's where we were understaffed."
"Overall, we're very well-staffed," he said. "We have the most employees per aircraft we've ever had," he continued.
Jordan said that Southwest had stated it will invest $1.3 billion in infrastructure improvements this year. The airline would typically spend close to that amount on upgrades and system maintenance in a given year, he added, but this year all spending is concentrated on operational reliability.
Earning back trust and doing business with business
As Southwest tries to extend its fleet, replace older planes, and fully reconstruct its pre-pandemic network, its major priority this year is instead on keeping its operation functioning smoothly.
"When you have an issue like December, it's going to take a long time for that memory to fade," Jordan said. "We must work extremely well. We've got to have a great winter in 2023-2024."
Along with keeping things reliable, the airline plans to continue making efforts to communicate those changes to customers.
While the airline is not exactly trying to draw ongoing attention to the meltdown — a bolstered social media presence is notable, along with sales, events, and marketing campaigns — it plans to keep a landing website that acknowledges the episode and outlines its plans to fix things.
Conversely, Southwest is taking a more direct approach with business clients who are more aware of the day-to-day operations of the airline business.
Dave Harvey, the airline's chief sales officer, told us that "some were very upset with us, and rightfully so, so we had to repair brand and trust." We brought a large number of [account managers] to our headquarters to see our operations center in action. And finally, they succeed.
The airline has aggressive plans to attract corporate travel managers and buyers to visit its headquarters and operations center during the 2023 Global Business Travel Association meeting, which will be held in Dallas in August.
According to Harvey, the clear approach is especially beneficial because business clients are more aware of the complexities and subtleties of how an airline operates than the typical consumer.
We have a lot to learn, and we merely own up to the fact that we need to move more quickly to prepare for the upcoming winter season. "Let's go up and have a conversation with a crew scheduler who uses [the upgraded] software about what changed prior to and subsequent to."
Harvey continued, "What we want to do is kind of like a show-and-tell." In order for people to sort of see it and interact with it, we're going to carefully choose which elements we believe to be the most crucial. We've been handling some of our major accounts essentially one-on-one.
Southwest has been focusing on corporate-managed travel since right before the pandemic. In 2019, the airline introduced its Southwest Business division, and in 2020, it started selling tickets via a number of international distribution networks for the first time.
Although the airline had some business travelers in the past, especially from small and midsized businesses, it hardly ever used the bigger corporate travel pool.
One result of this is that Southwest has plenty of potential to expand as it's effectively starting from scratch among the larger corporate accounts, whereas other airlines have seen business travel demand stagnate well short of pre-pandemic levels.
Despite the "book-away" of both leisure and business travelers from the airline in the first three months of the year as a result of the breakdown, Harvey remarked that things started to turn around in March.
"We're gaining share, and we're gaining new customers," he claimed. I remain quite hopeful about not only returning to 2019 levels but also expanding from there.
Harvey announced that "we're launching an entirely new groups and meetings product." "That's still very hot, particularly for small to medium-sized gatherings. And from all the predictions, it doesn't seem like that will happen any time soon.
A more favorable reaction
There are so far signs that Southwest is improving and running its business more efficiently.
Southwest was forced to order a nationwide ground stop for about two hours in April due to an IT issue with a firewall supplied by a third-party vendor.
Despite being inconvenient and coming at a bad time considering the previous holiday issue, the IT malfunction had nothing to do with the Southwest. Instead, it was more like the sporadic system glitches that every networked firm, including other airlines, encounters.
The outage, which occurred on a busy weekday morning, had the potential to cause a chain reaction of delays and cancellations, especially as more and more pilots and flight attendants found themselves either out of position for their schedules or nearing their maximum duty hours.
Southwest has responded to similar situations in recent years by doing a "hard reset" of its network, which is characterized by large-scale cancellations as it essentially begins over from scratch.
Instead, the airline made the decision to continue. Adam DeCaire, a seasoned airline executive who just assumed leadership of the airline's operations center, was able to communicate with crew scheduling and evaluate the network, said Watterson. He was able to determine that, with some effort, the airline could handle the day's flights with just minor delays and no negative effects on the following day.
It succeeded. Data from FlightAware shows that only 18 flights, or less than 0.5 percent, of the airline's 2,640 total flights that day were canceled. By contrast, over 64% of those flights experienced delays that lasted an average of 45 minutes. The following day, most everything had returned to normal.
Jordan remarked, "I wish we hadn't had a ground stop because that's a major thing. It has a large headline, too. Accepting the reality that if we have a problem, people will link it to December is part of what happened.
Jordan also cited the airline's management of a ground halt brought on by an FAA system malfunction earlier this year.
"We have learned a lot from the December interruption," he added. "The tactics we employ to recover, how to think about running the airline, canceling or not canceling flights, relocating acres.
"That day [of the IT issue], we got 99.9% of our customers to their destinations and had a 99.6% completion factor," Jordan continued. Despite the fact that we were late, we undoubtedly gained valuable lessons from December about how to handle major problems, consider canceling flights, and move workers in advance.
Now that the lucrative summer travel season has begun, many experts anticipate a challenging time due to excessive demand, a lack of employees, and sporadic bad weather. Southwest Airlines will face difficulties, just like every other airline. But the stakes might be higher now as everyone is still reeling from the holiday meltdown.
Only time will tell if Southwest can avoid a similar event thanks to the lessons learned from December and the modifications that followed. Whatever the case, it's certain that the crisis from last winter was a turning point for the airline moving forward.
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