Southwest’s historic meltdown was the result of ‘benign neglect’ years in the making, experts say

The airline canceled thousands of flights during the holidays and left hundreds of thousands of people across the country looking for new travel plans. Critics say that’s because it failed to fund technology needed to match its growth, dating back to Southwest co-founder Herb Kelleher.

By Bill Zeeble, KERA NewsJanuary 3, 2023 10:15 am,

From KERA News:

Up until this disastrous week, Dallas-based Southwest Airlines had braved blizzards, ice storms, hail, hurricanes, the Wright Amendment and competition – and emerged largely intact through its 51-year history.

But as the company expanded, pilots, flight attendants and other employees complained aging software failed to get them where they needed to be when flights got delayed or cancelled.

Now the company is facing what experts say is the logical result of the company’s years-long strategy of growth without sufficient technological investment: a historic meltdown that led to thousands of holiday flight cancellations that impacted hundreds of thousands of people.

Aviation analyst Scott Hamilton, with the west coast Leeham Company, said Southwest’s issues date back to the company’s profit-focused co-founder.

“I know that he’s regarded as kind of a patron-saint of Southwest Airlines and of the Dallas-Fort Worth area,” Hamilton said. “But the policies of being a skinflint on technology fall to Herb Kelleher and every succeeding CEO since then.”

The airline became the most consistent money-maker in the business, boasting 47 consecutive years of profits until the pandemic. But while most other major airlines declared bankruptcy during the resulting economic downturn, Southwest did not.

The plan behind record profits began simply: Southwest launched in 1971 with short hops from Dallas to Houston, Dallas to San Antonio, and back again. It grew slowly as a low-cost carrier, only adding additional cities when Kelleher, who died in 2019, believed Southwest could make money.

The list of Southwest Airlines flights cancelled grows at Phoenix Sky Harbor International Airport in Phoenix, Thursday, Dec. 29, 2022.
Ross D. Franklin / AP

Hamilton likes Southwest’s current CEO Bob Jordan – but he’s not convinced Jordan handled this week’s meltdown well, noting the leader’s video apology showed “zero empathy toward passengers.”

“Southwest has completely mismanaged the customer service, they’ve completely mismanaged the public relations,” Hamilton said. “There’s no question that Southwest needs to have an extreme navel-gazing from top to bottom.”

He added that problems at Southwest may extend past the executives.

“I think this was benign neglect on the part of the leadership at Southwest across several administrations,” he said. “And I would even say, why wasn’t the board of directors asked questions about that?”

Pilots union president Casey Murray, interviewed by NPR Wednesday, blamed the antiquated software for Southwest’s problems this week.

“We’re still using not only IT from the ’90s, but also processes when our airline was a tenth of the size,” Murray told Morning Edition Wednesday. “And it’s really just not scaled for an operation that we have today.”

Murray also blamed management, telling host Leila Fadel that the airline has seen a decrease in efficiency over the years.

“Southwest is having, really, some major issues connecting pilots to airplanes, connecting crews, flight attendants as well, to airplanes,” he said. “And it’s been getting worse.”

Now, federal officials are asking questions and drawing conclusions. In a joint bipartisan statement from North Texas congressmen – Republican Jake Ellzey and Democrat Collin Allred – both said Southwest Airlines clearly ran “unacceptable risks,” and this crisis was predictable and preventable.

“The payment of hundreds of millions in dividends to shareholders and a healthy profit through the first three quarters of this year clearly show that Southwest can afford to address the issues at hand but has chosen not to,” the letter said.

But analyst Mike Boyd, who’s also worked for major carriers, sees it slightly differently. While Southwest likely knew about technology infrastructure issues, the airline may not have seen it as an immediate problem.

“They knew they had a broken system and didn’t do anything about it? That’s not true,” Boyd said. “They knew they had a system that had problems, but they didn’t have any expectation it would collapse in a situation like this.”

The “situation” was the winter storms that blasted major airports in Denver and Chicago and blew east.

“The real issue is we have management failure not to develop the kind of IT systems that, foreseeably, they needed,” he said.

Boyd’s seen it before, when he worked for long-gone Braniff Airlines. The company grew quickly, but similarly, didn’t have systems in place to support that growth. The result: the airline collapsed in 1989.

While Southwest may not face such harsh consequences, the airline will likely deal with an image problem for a long time, Boyd said.

“They’re ‘the Grinch Who Stole Christmas’ this year,” Boyd said. “They can’t get away from that.”

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