Southwest Airlines Digital Transformation Fail

Key Points:

  • A lack of IT investment caused Southwest Airlines to experience the most extensive and costly travel meltdowns in airline history.
  • Failing to invest in IT infrastructure leaves your organization’s ability to function at risk.
  • Digital transformation ensures you can effectively compete and turn your IT investment into a profit center.

In December of 2022, Southwest Airlines had one of the worst airline travel meltdowns in the history of U.S. airlines. Holding the second largest share of the U.S. domestic airline market, Southwest Airlines canceled over 15,000 flights during Christmas week in 2023. The disruption was the most extensive and costly in the industry’s history and led to a federal investigation. The Southwest Airlines meltdown of 2023 should serve as a cautionary example about the importance of paying attention to your IT environment and investing proactively in digital transformation.

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What Happened?

The week of Christmas 2023, one of the busiest travel periods of the year, a winter storm affected travel across much of the United States and parts of Canada. The winter storm brought record-cold temperatures, high winds, and heavy snowfall, with blizzards and zero-visibility conditions forcing many airports to ground planes and even shut down entirely.

While many airlines were forced to cancel flights and faced personnel shortages due to the severe storm, most recovered quickly and resumed normal operations. Unfortunately for Southwest and thousands of holiday travelers, the airline’s systems for managing flight bookings and employee placement collapsed entirely.

While other airlines were able to remedy issues quickly, Southwest Airlines canceled 80 to 90 percent of their flights for several days consecutively, creating a gridlock of holiday travelers. By the time the disaster was over, Southwest Airlines had canceled over 16,500 flights leaving hundreds of thousands of travelers stranded during the December Holidays.

What Caused The Southwest Airlines Meltdown?

The primary reason for the issues experienced by Southwest Airlines is that they did not have the infrastructure to know where people were. The airline’s outdated technology and lack of investment in IT infrastructure left all its employees, airplanes, and travelers stranded.

During the early part of Southwest’s existence, the organization was very proactive regarding investing in its operational structure. The company was very farsighted and had one of the most advanced systems in the airline industry at the time. However, over the last 20 years, they’ve primarily focused on squeezing as much money out of their business as possible without putting money back into their operations.

While Southwest blamed the severe weather for overwhelming their systems, company executives admitted they had prioritized other things over-investing in technology for operations.

While CEO Bob Jordan stated that executives had talked a lot about modernizing operations, the company’s lack of action led to an infrastructure that the airline outgrew over the past couple of decades. While weather played a role in the Southwest Airlines meltdown, the ultimate cause was outdated technology due to running razor-thin margins.

According to the Southwest Airlines Pilots Association president, Casey Murray, the disaster was years in the making. Murray stated that the company became fixated on accounting metrics, stock buybacks, and institutional investors and lost touch with employees. In November, Murray warned that the company should release a plan and timeline for replacing antiquated IT infrastructure and obsolete crew-scheduling systems. He added that Southwest was only “one IT router failure away from a complete meltdown” during a busy travel period such as Christmas.

Unlike other airlines that had switched to electronic baggage and weather reporting technology long ago, Southwest has recently adopted this technology. Before that, the airline continued to deliver reports on paper for all of its daily flights. Southwest’s growth had outgrown the available IT infrastructure, and the airline’s hesitance to adopt new technology was well-known to employees.

The December 2023 event exposed systemic issues throughout the organization, leaving them unable to connect to planes by impacting the systems programs, processing power, and even telecommunications.

While other airlines use standard commercial scheduling software, Southwest continued to use two proprietary and internally-maintained software programs, SkySolver and Crew Web Access. Both programs are available as mobile apps. However, disruptions are common even during mild weather disturbances, forcing crews to use the phone for scheduling.

During the meltdown, company operators responsible for scheduling were overwhelmed, forcing crews to remain on hold for hours. In addition, crew members often discovered that their assigned flight had already been canceled, preventing them from operating other flights before their duty hours expired. To cope with the phone issue, Southwest trained an additional 1000 employees to help telephone scheduling operators.

Despite warnings from staff and previous issues, Southwest reduced the number of full-time tech employees by nearly 27% between 2018 and 2021, further exacerbating the situation. In short, the airline’s lack of investment left them with one of the worst IT infrastructures in the airline industry. And it’s because of this lack of investment they had this travel meltdown.

Lessons From the Southwest Airlines Meltdown

While a federal investigation into the situation continues and the meltdown at Southwest Airlines finally comes to a close with things returning to normal, there is a lesson to be learned. We are learning today from the Southwest situation that if they had invested proactively in their IT infrastructure, this total meltdown of their flight system would not have happened.

The Southwest disaster holds an interesting parallel to our own IT infrastructures. If we neglect our IT infrastructures, we risk getting behind the times and creating a situation where it is difficult and costly to catch up. In addition, we’re not in a position to be able to effectively compete with our competitors and squeeze as much possible value out of our IT technology.

The Southwest Airlines meltdown points out the importance of digital transformation and what that can bring to our businesses. Digital transformation is looking at your IT investment and trying to get the most possible for our business value.

We are interested in exploring digital transformation at BACS Consulting Group. We can help you get value and turn your IT investment into a profit center by applying digital transformation to your organization. Digital transformation includes areas such as ERP systems, artificial intelligence, and business analytics and can include much more depending on your needs and your business strategy. Contact us today to learn more about how we can help you with your organization’s digital transformation.

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