Lessons for CEOs from Southwest Airlines’ meltdown

A big winter storm above the 2022 Christmas vacations stranded countless numbers of travellers Southwest canceled more than 15,000 flights, starting on Dec. 15. Substantially of the blame for this disaster has been assigned to Southwest’s network working model: Southwest planes stick to routes from a single city to a different, somewhat than function from a hub in which planes fly back again and forth between two towns.

The community model gives increased utilization of planes and considerably less time on the ground, but it is highly delicate to disruptions, like those from key storms. Southwest administrators unsuccessful to entirely comprehend the weaknesses in their running product and failed to mitigate them, and considerably of this failure came from enormous less than-investments in data technologies.

What can CEOs master from Southwest? Below are a few lessons they would be smart to acquire to coronary heart.

  1. Have an understanding of the extent to which your firm’s approach and operations depend on technologies.
  2. Assess no matter if the firm’s facts technological know-how is holding the business competitive and aiding it innovate for the future.
  3. Allocate scarce methods to creating new applications and refreshing old engineering to stay competitive.

The CEO and other executives at Southwest unsuccessful in these regions. In a new essay in the New York Times, Columbia College Professor Zeynep Tufekci describes some of the antiquated technology at Southwest. For case in point, the flight attendants’ union put updating scheduling know-how earlier mentioned its demand from customers for enhanced shell out. If a flight is canceled, evidently flight attendants will have to cell phone Southwest to allow the company know the place they are and arrange for hotel rooms. Attendants report currently being on keep for a few to 17 hrs producing these calls. Tufekci asks why there is no smartphone application or web site for the attendants.

It appears from a Southwest spokesperson in the essay that the enterprise does have technologies for scheduling crews and plane, but it was overcome by the magnitude of the catastrophe and the airline experienced to revert to guide scheduling. The scheduling process is possibly previous and has not kept up with the expansion of the airline or it has not been tension examined or both of those.

Underinvestment in IT by an airline is stunning simply because American Airlines and IBM produced the first on line reservations procedure over 50 several years back. And a jet plane is one particular of the most complicated machines constructed today: A 737 has in excess of 367,000 areas from hundreds of vendors. For quite a few industries the price of laptop or computer components and program can appear daunting in comparison with other expense fees, but that 737 has a record rate of over $100 million. And in accordance to Planespotters.internet, Southwest has 745 planes in services, nevertheless I would guess they get a quantity discounted buying multiple planes at as soon as and almost certainly lease a superior variety of their plane. To staff members the cabins, Southwest has over 60,000 flight attendants. The Southwest Pilots association claims a membership of pretty much 10,000 pilots. These flight crews fly to around 121 places.

The Southwest flight and crew scheduling application was overwhelmed by the holiday break storm. So think about human schedulers attempting to restore a community masking 121 locations served by around 700 plane flown by nearly 10,000 pilots with about 60,000 flight attendants. It is astounding that it only took about a 7 days to restore functions to ordinary.

Without the possibility to evaluation Southwest’s programs, it is hard to make tips to the airline, but I do have two recommendations for acquiring started out. Very first, look for for present program from third parties or other airways to substantially boost the procedure for crew associates to notify the airline of their locale and prepare lodging. Next, purchase skills in operations study, primarily network assessment, and simulation to build a robust restoration technique for disruptions to the Southwest community. As an apart, the University of Maryland’s Robert H. Smith School of Small business, where I’m an emeritus professor of information methods, has school members who are specialists in operations analysis, simulation and facts know-how.

Tufekci points out that in the years just before the pandemic, Southwest acquired again its shares using $8.5 billion of “excess” income. Shareholders, and certainly shoppers and workers, would have been far better served if some of the extra money had been invested in know-how to increase operations and make them more strong. I ponder how lots of firms have undertaken stock buybacks while underinvesting in technological innovation?

Henry Lucas ([email protected]) is the Robert H. Smith Professor of Information and facts Programs Emeritus for the College of Maryland’s Robert H. Smith School of Business.